Implement financial management approaches

TABLE OF CONTENTS

Assessment Task 1- Written Report………………………… .…..................3

Introduction…………………………………………………….....................3

Team budgets and financial plans…………………………….....................3

Making changes to team budgets or financial plans…………....................7

Contingency planning………………………………………….....................8

Financial Management Approaches………………………………..............9

Assessment Task2- Written Report………………………………..............10

Monitor and control Finances………………………………………...........10

Review Variances……………………………………………………............15

Review and Evaluate Processes…………………………………….........….17

ASSESSMENT TASK 1- WRITTEN REPORT

INTRODUCTION:

Kathmandu furniture is a manufacturer based in Glenorchy, Tasmania. The company produces furniture’s which are sold to relaters in the Australian market. According to company strategic plans, the company aims to achieve a net profit before tax of $1000,000. The major risk to this goal are:

Poor sales due to economic downturn

Increase in expenses such as wages

In further, Australian preparations, the company is considering manufacturing overseas to take advantage of reduced costs. The company is also considering diversifying its product range to reduce poor sales of one product.

Budgeting and finance policy plan is very important as it helps to set the parameters for all financial budgeting. There are various plans and policies which should be followed strictly. All the reporting requirements, financial delegation and format for budgets and reports plays important role in whole plans and project.

1) Team budgets and financial plans.

The name of my organisation is Kathmandu furniture pty ltd. Furniture industry, all the companies and activities involved in the design, manufacture, distribution, and sale of functional and decorative objects of household equipment. ... Earlier furniture making was a handicraft, going back to the most ancient civilizations. The growing sophistication in technique brought a revolutionary change in the men who made furniture. Where previously carpenters and joiners had made furniture along with every kind of building construction in wood, several circumstances combined to create a new profession: that of cabinetmaker.

The senior management structure of the company is given below:

Person

Position

Kamala Lama

CEO

Henry Yeo

Managing Director

Lucy Gellar

CFO

Richey Burke

Senior Accountant

Sam Richard

Sales General Manager

Charles Pierce

Production Manager

Lucas More

HR Manager

Cash Flow projection

Receipts

Cash received from previous sales

$ 75,000

Cash received from cash sales

$55,000

(1)

$62,500

Expenditure

Cash paid for labour

$11,000

Cash paisa for rent

$8,500

Cash paid for marketing services

$800

Cash paid for stock

$31,300

Cash paid for Equipment

$750

(2)

$52,350

Cash increase during August (1) minus(2)

$10,150

Cash at start of August

$17,200

Cash at end of August

$27,350

Long-term budgets/plans

Long term budget is a budget plan for long time of period more than one year. In long-term budget the uncertainty is more than in short-term budget because the market cycle and its movements are more easily forecast in the short-term budget plan. Long-term budget is specially used in big business with big amount of investments. There are three types of budget such as balances budget, surplus budget, and deficit budget.

Operational Plan

Operational plan is also known as work plan. It is a figure of our department will give emphasis for the future use, mostly for coming year. Just we need to put our strategic plan with our future goal while making operational plan and we need to get it in daily to weekly basis. It is plan which provides a clear picture of how a team or department will do the activities to get the objective of an organisation’s aim.

Store Budget

Sales Centre A

Sales Centre B

Sales Centre C

Sales Centre D

Sales Centre E

Sales

640,000

640,000

640,000

640,000

640,000

Commissions

20000

20000

20000

20000

20000

Wages

100,000

100,000

100,000

100,000

100,000

Telephone

3,000

3,000

3,000

3,000

3,000

Stationery

18,000

18,000

18,000

18,000

18,000

Electricity

7,000

7,000

7,000

7,000

7,000

Rent

20,000

20,000

20,000

20,000

20,000

Office supplies

1,500

1,500

1,500

1,500

1,500

Total Expenses

979,000

979,000

979,000

979,000

979,000

Net Profit

339,000

339,000

339,000

339,000

339,000

Targets or KPI for production, productivity, wastage, sales, income and expenditure

Master Budget with Profit Projections

Kathmandu Furniture Pty Ltd

Master Budget FY 2016/2017 (figure in AUD)

FY

Q1

Q2

Q3

Q4

REVENUE

Sales

3,200,000

800,000

800,000

800,000

800,000

Commissions (2.5%)

80,000

20,000

20,000

20,000

20,000

Direct wages

190,000

47,500

47,500

47,500

47,500

Cost of goods Sold

300,000

75,000

75,000

75,000

75,000

Gross profit

2,630,000

657,500

657,500

657,500

657,500

EXPENSES

Accounting fee

20,000

5,000

5,000

5,000

5,000

Legal fees

6,500

1,625

1,625

1,625

1,625

Bank charges

1,000

250

250

250

250

Office supplies

5,000

1,250

1,250

1,250

1,250

Postage & prating

1,000

250

250

250

250

Dues & maintenance

500

152

152

152

152

Telephone

25,000

6,250

6,250

6,250

6,250

Repairs and maintenance

50,000

12,500

12,500

12,500

12,500

Payroll tax

20,000

5,000

5,000

5,000

5,000

Advertising

350,000

87,500

87,500

87,500

87,500

Superannuation

45,000

11,250

11,250

11,250

11,250

Wages and salaries

500,000

12,500

12,500

12,500

12,500

Staff amenities

20,000

5,000

5,000

5,000

5,000

Electricity

35,000

8,750

8,750

8,750

8,750

Insurance

100,000

25,000

25,000

25,000

25,000

Rates

100,000

25,000

25,000

25,000

25,000

Rent

190,000

47,500

47,500

47,500

47,500

Water

25,000

6,250

6,250

6,250

6,250

Waste removal

50,000

12,500

12,500

12,500

12,500

TOTAL EXPENCES

1,544,000

386,000

386,000

386,000

386,000

NET PROFIT BEFORE TAX

1,086,000

271,500

271,500

271,500

271,500

2) Making changes to team budgets or financial plans.

The purposes of budgeting are for resource allocation, planning, coordination, manage and motivation. It is additionally an important tool for choice making, monitoring enterprise performance and forecasting profits and expenditure. With suitable budgeting, limited sources are managed efficiently.

Budgeting is indispensable in the business planning process. A commercial enterprise owner has to predict whether or not the corporation will be profitable. Budgeting offers a mannequin of the manageable economic performance of a business, given that precise strategies and plans are followed. It provides a monetary framework for making essential decisions. To control a enterprise effectively, expenditure ought to be appropriate controlled. An instance of how budgeting performs a function in decision making is when spending money on advertising. When the finances allocated for this aspect has been absolutely used, the decision is probable to cease spending cash on it. Budgeting additionally helps measure the forecast business overall performance towards the real commercial enterprise performance.

Yes, it is achievable because of the variation in plans it helps to analyse the problem or lack in the team budget and financial plans. It is accurate because the software applications to be used in reporting are very reliable and accuracy rate is high such as

software environment-windows

Accounting Information System-BRB will use MYOB Account Right plus.

Data analysis-BRB will use Microsoft Excel

Actual results will be produced monthly by the MYOB accounting System. Actual variances to budget will be performed by Excel with a report prepared for senior management for significant variances.

Budgeting and finance policy

Budget preparations

-Variations to the enterprise layout have to be authorised by the CEO and senior managements strategic committee.

-The business design will set key parameters for all monetary budgeting.

-Prior consequences are to be analysed in order to pick out the profit level value centres, discover relationship between monetary information and set key performance symptoms and benchmarks for the future budgets.

-The price range planning committee will meet prior to price range being developed and agree on finances parameters. The committee will consist of all branch managers plus the CEO and finance manager.

-A Capital Expenditure finances will be developed from the accredited enterprise plan.

-Sales budget have to the first three months will be organized after the earnings price range is completed. A grasp budget including income projections will be accomplished from this grasp price range value centre allocation.

-The role of Chief Financial Officer within the organisation who I would approach to discuss and clarify the team budget/financial plan are

Providing leadership, course and management of the finance and accounting crew

Providing strategic tips to the CEO/president and individuals of the executive management group

Managing the techniques for financial forecasting and budgets, and overseeing the guidance of all monetary reporting

Advising on long-term business and financial planning

Establishing and developing relations with senior management and external partners and stakeholders

Reviewing all formal finance, HR and IT associated procedures

Contingency Planning

A massive section of a manager’s feature is planning. Planning includes getting ready contingency plans in the event the initial plans need to be varied. Using the crew budget/ monetary graph in the previous part, 5 an instance of a state of affairs or event that would purpose a problem/ trouble in the course of the implementation section of the team budget/ economic plan.