Planning and Implementing Financial Management Approaches Essay

Planning and Implementing Financial Management Approaches - Essay ExampleThe company is a family business, and has enjoyed brisk sales for the past three years. team up Store management. Briefly described, the team is in charge of the conduct of day-to-day operations of the store. Team members ensure the shelves are well-stocked, put out the order for deliveries when ancestry runs low, adjust prices according to promotional campaigns, and attend to the general maintenance of store equipment and facilities. Type of team budgets Monthly change budgets One of the financial plans the team is channelize by is the monthly nones budget, a short-term planning and monitoring tool which aids in the planning of bullion flows, predicting short-term shortfalls, and monitoring the appeal of accounts receivables. Forecasted immediate payment shortfalls enable store management to make the decision as to whether it could draw down on its credit facility with the bank, to cover short-term cas h needs when cash at hand is unable to meet the cash needed to cover the months obligations. Task 2 A hear of the monthly cash budget used by the store management team at Vital Essence is shown at the end of this report. The purpose of the cash budget is to guide the store managers decision as to enhancing store cash sales as well as credit sales, appeal accounts receivables, and disbursing cash in payment of expenses it is the aim of management to ensure that decent cash is available to settle the months obligations, thereby avoiding penalties and surcharges associated with past-due accounts. The prompt liquidation of fees is also important to maintain the companys good credit standing among its suppliers and financiers. Achievability The cash budget shown is considered achievable, because while shortfalls are expected at the beginning of the year, this is seen to be diminishing within the first quarter, and the store is able to attain positive cashflow in the fourth month of the year. Short-term cash want can be supplemented by a short-term bank loan which whitethorn be resolved by the second quarter of the year. Accuracy The cash budget plan is not entirely accurate, since it is essentially a forecast and much of the bases for arriving at the amounts are speculative. There are also events during the year which may affect the sales, cash flow, and disbursements in ways which cannot be foreseen at the time the budget was being prepared. It is reasonably accurate, however, for the purpose of observing how any variations in cash flow may affect the activities of the store, and may inform concerning contingency measures that may be taken therefore, it is also a risk-management tool. Comprehensiveness The cash budget is not very comprehensive, because there are items which it may have failed to take into consideration because the likelihood of their occurrence in indeterminate. What are usually included in a forward-looking budget are those which are recu rrent and have occurred regularly in the past, or at least with predictability if not regularity, so that the planner has sufficient bases upon which to value the possible cash receipt or disbursement. Task 3 Contingency plan Consequences if the situation or event occurred If only a pincer deviation in the plan occurred, then there are no serious consequences foreseen, only an equally minor adjustment may be involved. However, a number of serious consequen