TOPIC 3 - FINANCE

Role

Influences

Processes

Strategies

​Financial Management Strategies

• cash flow management 
– cash flow statements 
– distribution of payments, discounts for early payment, factoring 
• working capital management 
– control of current assets – cash, receivables, inventories 
– control of current liabilities – payables, loans, overdrafts 
– strategies – leasing, sale and lease back 
• profitability management – cost controls – fixed and variable, cost centres, expense minimisation – revenue controls – marketing objectives
​• global financial management – exchange rates – interest rates – methods of international payment – payment in advance, letter of credit, clean payment, bill of exchange – hedging – derivatives

Cash flow management

READ:

• Tips for improving cash flow (Queensland Government)
• 10 Steps to Cash Flow Heaven (The Guardian)
• What is invoice financing? (BlueVine)

Companies often delay payment to their suppliers to maintain high liquidity (and earn interest on cash held). This is a significant issue for suppliers, particularly small businesses, that struggle with cash flow. There has been talk of government regulation to prevent this tactic from being so prevalent. The Business Council of Australia has instead created a code for the treatment to encourage large companies to improve their timing of payments to small businesses. Read this article.
Factoring is such an old fashioned word now, with invoice financing (as per the BlueVine website linked above) and other more descriptively accurate terms are more common now.

WATCH the videos below.

Working capital

Understanding working capital (ANZ)
Working capital (BRW)

TASK: Working capital worksheet

Profitability management

Strategies to improve profit (Business Queensland)
Fixed and variable cost controls (morebusiness.com)
Cost centres (Accounting Tools)

Global financial management

Global financial management from Shani Hartley