1. The efficient management of finance is important to the success of an organisation. 2.
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Transcript of 1. The efficient management of finance is important to the success of an organisation. 2.
The Tasks of Finance Department
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Payment of Salaries
Production of Internal Financial
Information (e.g. budgets)
Production of Organisation’s
Annual Accounts
Payment ofInvoices
Analysis of Financial Information
(e.g. ratio analysis)
Every organisation must make sure that it has enough money:to pay wages and salaries.to pay bills (e.g. suppliers, electricity,
advertising).to develop new products and services.
Organisations must also check how much they are spending - organisations which have high costs, are often unsuccessful.
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The Financial FunctionEnsures that:
There are funds available to acquire the resources needed to help the organisation to achieve its objectives.
Costs are controlled through monitoring of budgets.
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The Financial FunctionEnsures that:
Not only that adequate funds are available, but that they are available at the right time. The cash flow of an organisation is also important.
Profitability of the organisation is controlled, ensuring that the agreed profitability targets are being met.
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The Need for PlanningThe care and planning of the financial
needs of an organisation are as necessary as
the planning for operations, marketing,
human resources and administration.
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The Main Tasks of the Finance Department
The Finance Department has three main tasks to help the organisation achieve its objectives:
Payment of wages and salaries.Payment of accounts.Maintenance of financial records and
accounts.
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Payment of Wages and SalariesOrganisations need to keep their staff
happy, one way that this can be achieved is by ensuring that they are paid the right amount at the right time.
The Finance Department will make necessary deductions for tax and National Insurance.
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Payment of AccountsThe Finance Department needs to ensure
that it makes payment to its suppliers on time, as well as collecting money owed by customers.
Payment to suppliers fall into two different categories:CashCredit
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Maintenance of Financial RecordsThe Finance Department will record
financial transactions, so that at the end of the year or period it can prepare final accounts.
Financial records are a history of the organisation’s activities.
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Business DecisionsWithout proper financial records, organisations are unable to operate efficiently or effectively:
How much money has the business spent?How much has the business sold?What is the value of the business’s assets?
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Identifying Appropriate Financial InformationOne of the major roles of the Finance
Department is to identify appropriate financial information, before communicating this information to managers or decision makers.
By communicating this information the Finance Department ensures that informed judgments and decisions can be made.
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