1、Section 5 Financial and cost managementCONFIDENTIALSection 5Financial and Cost ManagementChapter 1Overview3Chapter 2Route Map8Chapter 3Methodology9Key Performance Indicators (“KPIs”)9Why are KPIs useful?10What is required to introduce a KPI system?10Techniques used to improve working capital managem
2、ent12Techniques to increase profits14Budgetary Control14(a)Basic Issues14(b)Co-ordination of Budget Preparation15(c)The Sales Budget15(d)Overhead Costs16Cash and The Cash Budget16Effective Monthly Financial Reporting17Debtor Management19Overhead Costs20Monitoring Cash Flow20Profit Management20(a)Var
3、iable Costs21(b)Fixed Costs21Financial management and decision making22(a)Break-Even Point22(b)Marginal Profit22The Management Role23Enterprise Restructuring and Development Methodology ManualFile: 1ae0815e-272a-4bdc-866b-c64a30d36652.pdf; June 2002- 24 -Chapter 1Overview The economic crisis, global
4、 competition and shareholder demands for ever increasing value are just some of the challenging issues that businesses face. Today more than ever, organisations must transform their business practices to create leaner more efficient organisations to meet these challenges. Meeting these challenges of
5、ten requires fundamental changes to many aspects of the finance function. Thus the enterprise restructuring project will lead to fundamental changes and result in a more competitive enterprise that can utilise resources more efficiently and effectively than ever before. As one of the catalysts for c
6、hange in the organisation, financial management is one of the most important parts of restructuring process because it helps to create the necessary control and monitoring environment that is important to the ultimate successful implementation of change in enterprises.Financial Management is the on-
7、going process of ensuring that financial resources are allocated to those areas within a business that generate the greatest returns to the enterprise within the constraints of achieving the corporate vision and delivering the corporate objectives. Too often, in the past, the finance function simply
8、 explains the profits that have been generated rather than helping the business to create and deliver value. If challenges of todays marketplace are to be met, then finance management must change their emphasis from the past to the future that is, from simply recording and reporting profits to focus
9、ing of future value creation. There are three critical levels for financial management Level 1: Strategic and management decision making Level 2: Transformation planning and management Level 3: Performance managementLevel 1: Strategic and management decision making At the strategic level (level 1),
10、financial management needs to function in a supporting role to the decision making process. Typically these decisions would include: Making changes in the business (acquisitions, divestments) Making funding decisions (sources of funding to lower cost of capital) Making business decisions (operationa
11、l decisions regarding new products) Making investment decisions (purchasing new equipment) Pricing decisions (tactical / strategic positioning of product lines) In order to make sound management decisions, enterprise senior managers need the support of a well functioning and reliable financial manag
12、ement system. This system is much more than a technology driven recording system, but must also provide relevant financial information that can be translated into business and economic language.Level 2: Transformation planning and management At the executive level (Level 2), financial management functions in a leading role controlling daily operations by preparing management reports. The four fundamental parts of financial management information system are: Reliable accurate record-keeping (Accou
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