Planning and Implementing Financial Management Approaches Essay

Planning and Implementing Financial prudence Approaches - Essay ExampleThe company is a family business, and has enjoyed brisk sales for the past three years. Team stack away management. Briefly described, the team is in charge of the conduct of day-to-day operations of the install. Team members determine the shelves be well-stocked, put out the order for deliveries when inventory runs low, adjust prices according to promotional campaigns, and attend to the general aliment of farm animal equipment and facilities. Type of team reckons Monthly cash figures One of the financial plans the team is guided by is the monthly cash budget, a short-term provision and monitoring tool which aids in the planning of cash flows, predicting short-term shortfalls, and monitoring the collection of accounts receivables. Forecasted cash shortfalls enable store management to make the termination as to whether it could draw down on its credit facility with the bank, to cover short-term cash ine luctably when cash at hand is unable to meet the cash needed to cover the months obligations. Task 2 A sample of the monthly cash budget used by the store management team at Vital Essence is shown at the end of this report. The target of the cash budget is to guide the store managers decision as to enhancing store cash sales as well as credit sales, collecting accounts receivables, and disbursing cash in payment of expenses it is the aim of management to ensure that sufficient cash is available to settle the months obligations, thereby avoiding penalties and surcharges associated with past-due accounts. The prompt settlement of fees is overly important to maintain the companys good credit standing among its suppliers and financiers. Achievability The cash budget shown is considered achievable, because while shortfalls ar 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 inadequacy sack be supplemented by a short-term bank loan which may 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 be speculative. There are also events during the year which may simulate 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 accident measures that may be taken therefore, it is also a risk-management tool. Comprehensiveness The cash budget is not actually comprehensive, because there are items which it may boast failed to take into consideration because the likelihood of their occurrence in indeterminate. What are usually included in a forward-looking budget are tho se which are recurrent 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 nourish the possible cash receipt or disbursement. Task 3 Contingency plan Consequences if the situation or event occurred If only a minor deviation in the plan occurred, then there are no serious consequences foreseen, only an equally minor adjustment may be involved. However, a chip of serious consequen