Archive for November, 2010

Financial Planning

POME is the management of financial information on the presented in the financial planning activities. The continuum structure planning, business plan in this strategic plan operational plan for the detailed elements of the departmental budget is discussed. The chapter includes a specific discussion of the budget of the department and the department’s budget for large companies, whose ministry is a part. POME illustrates the integrated planning and defines the roles and responsibilities of all operational and project manager at higher levels. It also recognizes the effect of the ministries and projects to the results of the project.

Before beginning the discussion of specific aspects of planning, a quick look at the different types of plans and planning is appropriate. One of the projects’ planning involves several parties, some big, some less. The most important parts are now map , a project overview, vision, people, products, markets, customers and competitors, Strategic Plan , the long distance for projects, the annual budget -a detailed forecast of revenues, expenditures and results; investment budget , the identification and assessment of the most important investments in equipment and resources and the cash budget queue, forecasting cash flows and cash requirements, including the size and timing

POME case study.

planning and replanning

“. Hello, Koppal How are you? “

” Things are important. I would just remind you that it is time to update the strategic plan and confirm the budget this year. “

” Why do we need for the household, can confirm Koppal? We have to analyze our results and our financial statements, year-round. Everything must be under control. “

” We all keep our eyes on a number of financial measures this year, Pat, but if we collect all the information for strategic planning, we can see that something has changed in the environment. If so, should we revise our thinking as soon as possible to avoid unpleasant surprises. Remember earlier in the year when we get together the proposal for a new engine for the A600? We did not predict with certainty what the capacity that we follow ‘d to commands when we need the budget prepared last year. There is always a good idea to plan at the beginning of the year confirmed. “

” Are we the same forms that we used in the past, Koppal? “” No, we revised forms this year. You’ll get a call from the Department of Financial Analysts and one directed to rendezvous with you. Because you have learned about our system of accounting and financial analysis in the past year, you should not have too many questions. “

The essence of financial planning

Each project is a little planning, because even if there is nothing official, project manager or project manager have a reasonable idea of what to expect in the coming months. However, if there is no formal planning and budgeting are the results for next year’s planned Guesstimates “and can not be done to ensure that the results become a reality.

A Company, a company that wants to be successful, is too important to be left to chance. Planning and budgeting allows managers to control the results in order to avoid surprises. In a well-run companies are surprises. Advance planning enables the company to do business and identify the necessary resources to ensure that what is desired is possible.

Consider the words of many popular in terms of planning. Here are a few that convey the same message.

The lack of planning is planning to fail. If you do not like where you go, it does not matter what the path of your work and your plan prenez.Planifiez.

plan provides the means to translate between the administration and to differentiate. So that the planning process in sight

Business Planning is a continuous process

Planning and budgeting can be described within the company and the coordination of information, the results predict the future. POME briefly describes a continuous planning that maintains the current plan rather than a break once a year to complete as quickly as possible, often without regard to the validity or consistency with the objectives of the company. Planning must be continuous, timely and complete, involving all levels and in all functions of the organization. The process is based on achieving the commitment of the people, the results, if the project to meet its goals.

Strategic planning and budgeting operations are not difficult in itself, but many companies do not work effectively on both. Consequently, their planning documents do not provide accurate plans, and this in turn brings discredit on the process and led to a deterioration of future efforts.

The planning system is the most effective overall planning process with people at all levels, the planning effort converts from a break once a year in business to provide continuous updating of the action. Therefore, the planning and budgeting is an essential part of the management company.

So the healthiest source of information predicts revenue between nations, as they understand the purpose of information. Also from staff and expenses to expect the product, sales and profits are predicted better by those who have to deliver the results delivered. People who should be constantly in the market to generate better intelligence on competition. The sales staff, the people in the organization closest to the market, often to identify new products most likely to succeed.

roles of key players

In the planning process for the projects, everyone has roles and responsibilities. Most importantly, the project manager, coordinating the budgeting and planning, often financial project manager, is not responsible, nor have the budget or plan. Rather, the role of the budget of the project manager is to facilitate and coordinate.

Top management sets the rules for planning, defining the overall strategy and goals. It also approves the budgets and plans, and retains overall responsibility for the process and outcome quality.

exploitation of the project managers are responsible, the features relating to their areas. They provide information to determine what steps must be taken to determine what resources they need to succeed and to communicate, often through the project budget, other parties, projects, needs and expectations, and their contributions to other project managers.

The project manager monitors the budget process and provides the interface that will receive all project managers responsible for the information they need. The financial functions of the project manager, planning, development, planning assumptions, coordinating communications for the organization to ensure the prevention of conflicts between departments and disciplines, and want to see the final plan, which to update the budget or strategic plan, yields consistent and clear in his expectations and requirements. But the project budget is not the budget.

Overview of the financial planning

It is easy to integrate a comprehensive financial planning program in the normal activities and responsibilities of various positions within a project. This project managers identify projects of the integrated relationship between the historical experiences, current activities and future growth and success. The persons most knowledgeable about all aspects of business operations, to meet in the function. The integrated nature of operations means that are commercial enterprises and financial planning almost synonymous.

Planning Sequence are

Since the information business planning based on information that it is making progress, projects, comprehensive planning will follow the plans of the general development of certain, in the longest range of periods shorter , taking advantage of the collected evidence.

is why at the end of the financial books for a year at the beginning of the new fiscal year, planning for the next cycle begins. Remember that plans already exist for the current year. We assume for this discussion this year and calendar year coincide, although obviously not for this to be true may be necessary.

The first step is to examine the business plan is already in place to ensure that it still applies. If so, what is good. If not, management should acknowledge the vision and mission project or change them if necessary. Managing updates and other areas of the business plan to take into account as defined in the following section, the executive, new or revised.

The update or business plan is confirmed as a starting point for strategic planning, leadership for five years, the development of a company that the expectations required for the individual sentences of five years and measures to achieve the strategic objectives of strategic plan is updated annually. the first year of the plan submitted that the story, and each subsequent year will be updated and a new fifth year is added

.

This update is usually done in the first half of the year. The capital budget is usually in the context of the strategic plan initiated and sometimes adjusted by the annual budget, if, when assessing the performance of other investment needs are identified quickly. Capital budget decisions in the cash budget are included. The cash budget is focused on the availability of cash resources needed to meet business requirements

The process of business planning

There are five primary components of the planning process. to plan business plan, strategic planning, operational plan or budget, investment plan and cash flow. These plans are linked to ensure the leadership of succession. Other planning elements are less important, and really different components of other plans. For example, the advertising budget and media plan in detail the timing and cost of the advertising program of the year, an annual budget. The advertising program is also an important element of the Strategic Plan and can have significant impact on the cash budget, particularly concerning the timetable. In the area of product development is an integral part of the strategic plan and also has an influence on the annual budget and cash budget. It could also contribute to the capital budget.

Note that, once it is established and accepted, the budget throughout the year. If management decides to update or to revise the budget during the year, which creates a different basis for comparison, but does not replace the “original” budget.

structure of this chapter, we examine each of the main types of planning and tasks, starting with the Business Plan.

Business Plan

The business plan often as an overview of the projects is often prepared the basis for obtaining funding. And often it is the first attempt in the planning because it provides a good starting point, and it is usually for companies who have no formal planning. Business plans should be reviewed and updated or confirmed better every year, if the strategic plan is prepared. Because some information and some of the structure of the business plan is different from strategic planning, management’s current business plan should be separately assigned to a task.

In today’s market there are many discussions about business plans. Most companies are looking for funding must submit a business plan. Many ask potential employees, the business plan, before acceding to see an organization. to suppliers and customers are invited to a strategic alliance, a copy of the business plan. There are many, many books and pamphlets on how to write a business plan. The American Management Association offers seminars and courses for self-study, prepare a plan how to write business.

A business plan is the first step of a formalized strategic planning. As mentioned above, he describes the project, its people, products, markets, customers and competitors. Most of the time a business plan written for a particular purpose answer, and therefore very closely the demands of the audience he addresses.

A business plan can also serve as the company as well. As such, it should perhaps first written with the internal organization in the sense of satisfying than his audience and then edited, an outsider. If the management of the business plan as a necessary evil, they write for the foreign country, if the management focuses on the business plan, the first guide internal development, they write for the organization to meet inside. What the audience, the structure of the business plan is essentially the same. In the overview that follows on the obligation of a venture capital provider to plan an organization that is proposed based services for all age groups.

Obviously, serves the business plan, often originally written in order to win funding, as a comprehensive starting point for further strategic planning and operational results. Keep the business plan update is part of the strategic planning effort that the projects should be continued. In the space below the main themes of a business plan presented in one. Other topics may be added to logical order and the order can be changed, but well developed business plans on these issues

room. Plan A business plan

Strategic Plan

The process of strategic planning is the aspect of long-term projects in the future. The most commonly used is five years, but it really should be reflective of the life cycle of products for the company. For this reason, the strategic planning for a period aircraft manufacturer would be much longer than five years and a software developer much shorter.

The strategic plan is presented annually by eliminating the past, adaptation and modification of the last four years (including year), and by a further year updated fifth. Thus, in the renewal period 2005 January-June 2005, was introduced in 2004 (it is now history) from 2005 to 2008 updated based on the experience in 2004, and 2009 is added. Note that the first period is updated, 2005, the period for which created a detailed budget. Therefore, the strategic planning provides a first confirmation of the budget and the feasibility was. In addition, the specific expectations of the year first strategic plan are well known and a point from the five-year plan.

If, perhaps, where the company has changed, the first opportunity to review construction plans and expectations. Many companies regularly review their activities and provides a revised forecast is to keep informed. Therefore not included in the update process, the audit, evaluation and review of the measures are measures and benchmarks that are the essence of the strategic plan. ..

Definition of the strategy

Plans for a “Strategy is the fundamental approach to business, he steps to reach their goals strategy has been described in many ways, among them are:

An action plan to reach a target précis.Un program carefully designed to achieve the objectifs.la management skills to achieve fin.Lignes guidelines for decision-directional hit.

The strategy defines the methodology for achieving the the objectives, strategic goals. The tactics used selected projects to the project can achieve its goals in advance in accordance with the overall strategy. Often summed up the strategy of a project in a word or short sentence. 11-3 exercise can provide an opportunity strategies the company that you know to link.

The difference between strategy and tactics

The terms used to define business strategy are usually on military analogies. strategic objectives to describe , what we want, the strategy outlines the approach that we take to attain the goal of want and tactics are explicitly support measures succeed which is defined.

So to get dollars in sales is not a strategic goal, not more than 10,000 troops to destroy enemies, is a strategic objective. To the recognized leader in the industry on product quality are based, can make a valuable strategic objective in the same manner as the control input of a valley, or be an enemy on a field battle a valid military target.

To achieve this goal, the steps of the action projects are committed to quality and reliability. steps Targeting market share and the lowest cost is not appropriate. The commander can make a flanking maneuver or climb to the ridge above the valley. a damming a river that is the valley does not help, the military leader to succeed.

Transport this analogy little further, the following scenario.

Our strategic objective is the enemy surrounded, contained, and the acquisition of its high strength, while minimizing our losses.

We are a promotional strategy to undertake.

therefore

unit 1 circuit in the east along the river. Unit 2 district in the west along the ridge. The unit 3 to allow against the enemy in the south of Blocks 1 and 2 succeed.

If all units complete their action steps , the strategy will be successful and strategic objective to be achieved as the set. A review of the strategy and tactics by the Allies in the Gulf War in 1991 the successful implementation of such a military strategy and tactics here.

The operational plan and annual budget

Consider this scenario: has

Tom in the production of specialty chemicals Bright Light show was Brites last five years Each year the top management of his unit in the budget for next year, based. . on revenue projections by the projects of high field provided it is budget time again, and Tom is flush with its top people to their budget figures Session

Tom

.

the team Listen. These figures are much too high. I checked the planned sales and production figures this year. There is no way that we have this amount in your inventory or work to spend. What to do?

Janice

:

Well, I was now a project manager for three years and every year we give the direction of our best estimate and each year they return to us and ask us to reduce the number usually…. they want us to give back more than 18 percent I’m sorry to cut corners when I other units more than enough to see in their homes I met all the numbers by 20 percent

Tom

…

I can see why this approach is appealing, is Janice, but how can the top management or the rest of us really good What if they do not start to do good with numbers?

Do you that the behavior of management in Bright Brites encourages project managers, to submit detailed budgets and plans? Or is it more likely that inflate Project Manager their needs so that they have the resources to have to perform their official duties? management strategy is an effective tool to everyone in the organization is committed to the goals of the company get? works

Long-range planning and annual budgeting enable management, goals and expectations to establish set. They also identify criteria for measuring success in periods and financial measures below.

In and of itself a strategic plan or budget is nothing more than a few documents, the words and figures. succeed for the planning process, all members of the organization to accept written for the budget or the plan and is as valid targets. The completion of this buy-in from those who must deliver results, is one of the most important points in the program. Active participation and commitment of the operators is important to have good business planning and implementation of plans.

If we process consider, subject to the same conclusions, even if we speak of the strategic plan or budget. For example, a strategic plan sets goals and expectations, both financially and operationally. A well-designed plan provides a clear set of actions to take upon completion objectives apply. The same in detail, for the annual budget.

The action steps in all plans should deadlines and criteria for the measurement included. The result is a series of benchmarks or evaluation points, the project manager the progress towards . the objective assess themselves

projected financial future

Planning uses the analysis of what happened in the past to guide the projection of future results, it helps to answer questions such as:. we have how the results of the past? What can we do to improve?

In the projection of future results, the starting point of the past is on. If you felt the project leader and the organization, the performance satisfactory in the past or assumes exemplary damages, it is used as the basis for the next waiting

.

, on the other hand, performance is not satisfactory, some significant changes in the projection to be incorporated. consider planners have the performance in the to see the past as it should be changed. In a well prepared plan, the expected results, to identify when to be a big part of the revenue or expenditure or less important is the factors that deviate the result of the past.

Capital Budget Committee

The capital budget is a separate task for two reasons: it affects, it is of strategic planning and effort is acknowledged and can be modified through the annual budgeting, and more often with large resources, than what is on normal commercial transactions.

Budget Committee Cash

The operating budget focuses described above to operations. We sold and what we have done as a short-term activities are measured. But as we all know, can today’s activities are not cash flows represent today. The cash flow statement can be totally different from the daily activities.

The cash budget, the activities, the Treasury and presented them as they come to. For example, the raw materials we need to get our product preparation several months are purchased before they have to be used

Such an operation in Accrual seem normal.

Inventory

1000

Accounts Payable

1000

The same operation if it occurs, non-cash at all. Although the project has an obligation, there was no effect on the availability of funds itself.

When the bill is due, 30 days later, paid it any other transaction accounts.

Accounts Payable

1000

Cash

1000

This of course impact on cash, which must be recognized, the important point is here is that . the cash transaction, if you are planning scheduled for 30 days from the date of purchase of inventories

Even if the sale is recorded, shows the process as follows:

Accounts Receivable

1500

Buy

1500

has again been no cash transaction, and no recognition of cash if the customer performs the payment, the transaction is recorded accounting as follows:.

Cash

1500

Accounts Receivable

1500

The above buy when the cash transaction was expected, it would have a day planned well after the date of the sale.

If the amount transaction has no impact on cash, is not included it in the cash budget. Therefore, interest, depreciation and inputs, and other non-monetary non-cash budget is incurred.

cash due to the receipt of revenue, mostly a considerable time after purchase and were recorded were long post-payment to have been sold the cost of the goods or services coverage. Other sources of cash inflows are financing activities tax collection last year on payments and similar non-repetitive.

to determine the appropriate time off of funds, the project budget refers to the years before and developed a model of customer payments. Sales are then converted into sales by following the example of the experience of projects in recent years. If management decides its policy on Credit management change, maybe try increasing the collection, the cash flow of time can improve, such a change can be accommodated easily.

Financial Planning Seminar