Overview of Financial Management and its Environment PDF

Overview of Financial Management and its environment  GROUP TOPIC BREAKDOWN Financial Management and its Functions (reported by Marion Joan Aguilar) Functions of Financial Management (reported by Kim Bryan Ocampo) Organization Struct...

Overview of Financial Management and its environment  GROUP TOPIC BREAKDOWN Financial Management and its Functions (reported by Marion Joan Aguilar) Functions of Financial Management (reported by Kim Bryan Ocampo) Organization Structure (reported by Justine Monique Baldovino) Need for Funds (reported by Mark Johnren Sempio and Victor Gatmaitan) Ways to Improve ROI (reported by Mikay Del Rosario) Need for Pressure towards Effective Use of Assets (reported by Rochelle Tan) What is Financial Management? Financial management is about controlling the flow of money in and out of the organization.  Financial Management Functions 1. Accounting This includes tracking, recording, and matching all monetary transactions within the company. 2. Project management Projects are a chief source of both income and expenses, especially for professional services, such as engineers, lawyers, and consultants. 3. Procurement This is typically divided into two categories: Direct procurement includes the parts and raw materials used to make a company’s products. Indirect procurement refers to supplies that don’t go into a company’s products and services but are used for day-to-day operations. 4. Financial planning and analysis (FP&A) FP&A specialists are responsible for modeling potential scenarios and forecasting likely outcomes for the best- and worst-case situations. 5. Tax Every company must file taxes, but it gets especially complicated for big companies that must file in different countries. Such companies often have specialized tax teams who use tax-reporting software for country-by-country and other reporting. 6. Treasury The treasury department is responsible for tracking and managing capital assets, debts, loans, and cash in the bank. 7. Risk and compliance This function manages controls for financial risks—everything from audits to natural disasters—and reduces the company’s exposure as much as possible. Finance Department Organization Structure Finance A Finance Department manages a firm's long- term and day-to-day monetary operations and strategy. Accounts Payable (AP) The Accounts Payable, or A/P, function is responsible for keeping the lights on and ensuring that all company vendors are paid in full and on time. Accounts Receivable (AR) The Accounts Receivable, or A/R, function is responsible for collecting payments from customers or clients for goods or services provided. Accounting & Reporting (Controller Group) The Controller Group is responsible for maintaining a company's books and ensuring that all business transactions are properly recorded and managed. Budgeting & Forecasting The Budgeting and Forecasting Group is responsible for producing and assessing a company's budget by calculating the variance between planned and actual costs. Expense Management The Expense Management Group is responsible for monitoring and auditing all employee-initiated expenses. Expenses can include travel, lodging, entertainment and food. Internal Audit & Compliance The Internal Audit & Compliance Group is responsible for overseeing a company's financial operations to ensure that they are in line with internal and external policies and regulations. Tax The Tax function is responsible for managing and planning all tax-related expenses. The circumstances that surround tax management can be complicated, especially when taking into account the various rules of taxation dealt with by companies that operate globally. Treasury Management Also known as Cash Management, the Treasury Group manages all of the company's assets to maximize liquidity and reduce risk. Payroll The Payroll Group is responsible for the administration and documentation of all salaries, wages, bonuses and deductions (payroll tax, social security) received by employees.  Need for Funds: An Overall Look Retained Earnings Businesses aim to maximize profits by selling a product or rendering a service for a price higher than what it costs them to produce the goods. It is the most primitive source of funding for any company. Debt Capital Companies obtain debt financing, or debt capital, privately through bank loans. They can also raise capital by issuing debt to the public. Equity Capital Equity capital, or equity financing, refers to the funds a company raises by offering ownership stakes, either publicly or privately, in exchange for investment. Stock Market Companies can raise funds from the public by offering ownership stakes in the form of stock. Private Market Private equity capital is secured from private investors, such as venture capitalists or private equity firms. Other Funding Sources Other funding sources include crowdfunding, donations or grants, and subsidies that may not have a direct requirement for return on investment (ROI). What is Crowdfunding? Crowdfunding represents a process of raising funds to fulfill a certain project or undertake a venture by obtaining small amounts of money from a large number of individuals. Donations Donations are a common way for nonprofits and social enterprises to raise the funding they need to carry out their mission without the pressure of generating profits. Government Grants and Subsidies Grants and subsidies are examples of financing provided by government agencies to support specific projects, initiatives, or sectors that align with public policy goals.  Alternative Ways to improve ROI Return on investment, or ROI, is a mathematical formula that investors can use to evaluate their investments and judge how well a particular investment has performed compared to others. 1) Allocate your budget appropriately. To improve your ROI, you need to spend wisely. 2) Track the right metrics. Before you set any campaign live, you need to know what your goal is and how you’re going to measure whether or not you achieved it. 3) Use better tools. When you’re doing content marketing, you aren’t just spending money. You’re spending time, energy, and resources, too. If you want to increase ROI, look for ways to work smarter and maximize your resources effectively. 4) Get more mileage from your content. Creating good content is a big investment, so maximize your return by making your content do more work. 5) Scope out the competition. Want to know what works without doing the work yourself? Look at what your competitors are doing. What do their ads look like? What messaging do they use?  Need for Pressure towards Effective Use of Assets 1. Maximizing Return on Investment (ROI) 2. Competitiveness and Innovation 3. Sustainability and Environmental Responsibility 4. Risk Management and Operational Resilience 5. Regulatory Compliance and Stakeholder Expectations 6. Technological Advancements and Digitalization 7. Cost Reduction and Resource Optimization 8. Extending Asset Lifecycle