BSBFIM601 Manage Finances Assessment 1

Cash flow plans:

Find another investor to invest $35,000 total $70,000 as the start-up capital to begin this business. All food supplies will be paid by cash in the first month, then by 30-day account. The aim is to generate at least $250,000 net profit at the end of the year.

Capital Expenditure Budget

The process of budgeting for capital expenditures is important for a business to operate and grow from a sound financial position. Capital expenditures are expenses a business makes to generate financial benefits over a period of years. Thus, a capital expense is the cost of assets that have usefulness and can help a company create profits for a period longer than the current tax year. This distinguishes them from operational expenditures, expenses for assets that are purchased and consumed, or used up, all within the same tax year. For example, printer paper is an operational expense; the printer itself is a capital expense. Capital expenditures are much higher than operational expenses, covering the purchase of buildings, equipment and company vehicles, although they may also include items such as money spent to purchase other firms or on research and development. Operational expenses are just what their name signifies, the expenses required for the company to operate from week-to-week or month-to-month.

PART B

In developing the budgets and plans proposed, the topics below are to include details on how:

Negotiation was undertaken with relevant groups and individuals in ways to build commitment to the plans

In large corporations, budgeting is a collective process in which operating units prepare their plans in conformity with corporate goals published by top management. Each unit plan is intended to contribute to the achievement of the corporate goals. Unit managers prepare projections of sales, operating costs, overhead costs, and capital requirements. They calculate operating profits and returns on the investment they intend to use. The budget itself is the projection of these values for the next calendar or fiscal year. As part of this process, each unit presents its plans and budget to a reviewing upper management panel and may, thereafter, make whatever changes result from instructions from or negotiations with the higher level. Texts presenting, documenting, and defending the rationales underlying the numbers are usually part of the planning document. Approved budgets then become the road-map for operations in the coming year. Ideally monthly or quarterly budget reviews track performance against the budget. As part of such reviews, changes to the budget may be approved. At year-end managers are judged by their performance against the budget.

You identified and agreed on the links to the achievement of organisation strategies

Strategy realisation essential elements

• motivational leadership - concentrates on achieving sustained performance through personal growth, values-based leadership and planning that recognises human dynamics
• turning strategy into action - entails a phased approach, linking identified performance factors with strategic initiatives and projects designed to develop and optimise departmental and individual activities
• performance management - involving the construction of organizational processes and capabilities necessary to achieve performance through people delivering results

Your negotiated with your supervisor (your assessor) to obtain a clear agreement of the matters to be incorporated into the budgets and plans

Planning and procedures play a crucial role in embedding sustainability into the day to day operations of your business. Achieving the goals and strategies set by senior management will rely, in part, on setting up the right work systems and clear procedures. Providing information, training or mentoring will ensure that all employees understand what is expected of them. Another crucial factor is making sure that the procedures are applied consistently. This requires commitment from employees to apply the procedures and from management to allocate the time and equipment needed.

Regarding to the budgets and plans, they will show all outcomes confirmed in terms of clear, concise objectives and timeframes. Also, incorporate the outcomes of your negotiations and meet organisations approval process and provide written confirmation of all delegations, accountabilities and responsibilities.

PART C

Detail in writing all delegations and budget accountabilities for implementation and management of your package

A written financial management and delegation’s policy is required as part of meeting Standard 11 (Governance and accountability). The organisation develops, implements and reviews procedures for financial delegations and internal controls in the organisation, and financial management including insurance management and management of service agreements.

Policy checklist

The following checklist will help you check that an existing policy covers this area adequately.

The policy should:

‰ say who will be responsible for financial management

‰ explain how financial systems will be established and managed

‰ say how delegations of authority for financial decisions will be documented

‰ show how the organisation will be protected from fraud and financial mismanagement

‰ contain clear procedures and actions

‰ indicate the timing of any actions

‰ show when it was approved

‰ show when it was last reviewed.

Budget accountability is best understood and implemented as an evolutionary, ongoing process best characterized by a culture that recognizes the need to follow sound financial management and appreciates financial monitoring and controls.

Develop a written procedure that details the recording systems and documentation process you will follow for monitoring and controlling all activities against your plans.

• Implement processes to monitor actual expenditure and to control costs across the work team
• Monitor expenditure and costs on an agreed cyclical basis to identify cost variations and expenditure overruns
• Implement, monitor and modify contingency plans as required to maintain financial objectives
• Report on budget and expenditure in accordance with organisational protocols

Develop a risk management and contingency plan for all your proposed financial plans; along with a policy and procedure to be followed when implementing these plans

Risk Management and contingency plan:

Risk management is a systematic way of identifying potential risks within a project, gauging or estimating the probabilities of these risks occurring, to then develop strategies to manage these risks. In the commercial sector, considerable resources are rarely available to strategies to publicly funded digitization projects, nevertheless effective risk management plans can be put in place by adopting a systematic process of identifying and evaluating potential risks and using this analysis to develop strategies to manage and control them. This process can be broken down into three main processes: assessment, implementation and monitoring.

Risk assessment is the process by which potential risks to project are identified and assessed, and appropriate responses to these risks are developed. Firstly, a list of the uncertainties involved in the project is produced. Secondly, the likelihood of the uncertainties occurring and the relative impact they could have assessed. Thirdly the risks are prioritized and strategies developed in order to minimize their seriousness.

It is not too difficult to think of several “generic risks” involved in digital resource creation. Listed below are the mail potential areas of risks for a vast majority of digitization projects:

• Tasks involving third parties: shortage of food supplies/electricity
• Relevant staff development: Lack of Staff
• Compliance to Standard: The food standard may rise in the future
• Preservation and sustainability of resource: recycling equipment and waste removal
• The appearance of competitors may result in the drop of sales.

Risk Analysis

Risk Analysis is a proven way of identifying and assessing factors that could negatively affect the success of a business or project. It allows examining the risks that organization face, and helps you decide whether or not to move forward with a decision.

Risk Probability

The appearance of competitors and food industry standard to change are probable in the future.

The corners of the chart have these characteristics:

• Low impact/low probability – Risks in the bottom left corner are low level, and you can often ignore them.
• Low impact/high probability – Risks in the top left corner are of moderate importance – if these things happen, you can cope with them and move on. However, you should try to reduce the likelihood that they'll occur.
• High impact/low probability – Risks in the bottom right corner are of high importance if they do occur, but they're very unlikely to happen. For these, however, you should do what you can to reduce the impact they'll have if they do occur, and you should have contingency plans Add to My Personal Learning Plan in place just in case they do.
• High impact/high probability – Risks towards the top right corner are of critical importance. These are your top priorities, and are risks that you must pay close attention to.

Develop a policy and procedure that outlines proper maintenance of records of financial performance and provides for evaluation of the effectiveness of your financial management process

Underpinning all financial management systems is a series of financial policies and procedures which guide operations and lay out how your organisation uses and manages its money. A financial procedures manual brings all these together in one document. It helps to establish financial controls within the organisation that ensure accuracy, timeliness and completeness of financial data. The manual is generally used by finance staff, but it can also act as a reference for trustees, managers and other staffs. There is no one model of a financial procedures manual and yours will depend on the needs and structure of your organisation. Below are the content headings of each section of a typical financial procedure manual. They can act as the starting point for your own manual and can be adapted to cover the needs and activities of your organisation. Your manual may also need to include key elements of external financial regulations.

Review and evaluate financial management processes

• Collect and collate for analysis, data and information on the effectiveness of financial management processes within the work team
• Analyse data and information on the effectiveness of financial management processes within the work team and identify, document and recommend any improvements to existing processes
• Implement and monitor agreed improvements in line with financial objectives of the work team and the organisation