The Basics of Effective Working Capital Management
Posted by admin in Working Capital on April 4, 2012
Working capital management can be defined as the process of managing short-term or current assets and short-term or current liabilities. Short-term assets are composed of loans and advances, inventories, investments, debtors and cash and bank balances. On the other hand, short-term liabilities have the following components: trade advances, creditors, provisions and borrowing. It is advisable for you to effectively manage your working capital so as to ensure that you minimize risks and that you continue to become profitable.
Working capital, which can be defined as the available cash on hand for the daily operations of your business, can actually be affected by a number of factors. These factors include external issues such as the business and legal environment and internal mechanisms such as information systems and organization structures. Undue focus on the task of producing good quarterly sales results can also be expected to have a huge impact on it. It can negatively affect your working capital performance. If the operations of your company have marked seasonality and your working capital requirements vary from one quarter to another, then there is also a great chance for your working capital performance to be negatively affected.
If you want to perform effective working capital management, then it is advisable for you to skillfully manage the finances in other aspects of your company including debtors, creditors and tangible assets. Debtors or those customers who purchase goods and services from you on credit hold the health of it of your business in their hands even if the term is just thirty days. If these debtors cannot make their payment on time, then you can expect your cash flow to be seriously affected. This will cause a lot of trouble to your working capital. Because of this, you need to make sure that you take the necessary action to make your debtors pay on time. You may also move those problematic accounts into a cash only basis before these accounts start to cause a lot of strain to your funds. Read the rest of this entry »
The Project Management Culture
Posted by admin in Project Management on March 28, 2012
How can you tell if an organization’s projects are likely to succeed? One clue is the culture in which projects are managed. Many companies simply hand over to someone to run projects and hope that things work – or at least will have a convenient scapegoat. The companies whose projects are more likely to succeed are those that have set up structures and procedures that support their project managers.
People often ask me what is the key to successful projects easily predictable: those where the failure is the exception, and success is the norm. My answer is “training”. Many organizations are perplexed me. They would not dream to assign someone as a designer or an architect or an engineer who had no training and no qualifications, yet routinely assign someone who has neither to carry out their projects. Then they wonder why the projects to fight.
If you want your organization to succeed in his plans, training the people who run them. Teach them how to define a project, plan it, to run, and manage a team. In other words, their training to become good managers. Only then your chances of a successful project.
What are the reporting requirements do you impose your people? Are required to produce a project charter? A project plan? A risk analysis? Who reports on the state go? How often? What should I say? How will you follow up on issues that they raise?
Until you can answer these questions, notices will be ad hoc and ineffective. While many people like to have to create documents, any environment that does not need them is one in which management has denied any interest in the project and not only act to assign blame when things go wrong. The existence of good accounting principles is an indication that management cares about the progress of projects and, therefore, is ready to help when needed. Managers that do not impose reporting is saying: “I do not mind.”
The creation of these structures requires work and, in most organizations, the work that is not forced tends not to have done. One of the side benefits of sending your people to understand that training is critical as these are, and will either force you to set up or will do so themselves.
Companies that consider the management of the project so important to feed people who are responsible. They ensure that their people have a clear career path that starts with basic training. To this, add features such as promotion criteria, recognition of achievement, and the chance to advance to the highest levels of the organization. Furthermore, these companies recognize that project management is a discipline that has a need, and one that wants to promote. This recognition begins with training. Without it, nothing else matters. Companies that recognize that attracting, developing and retaining the best professionals available and responsibilities and have taken the first steps towards the success of a coherent project. Read the rest of this entry »
Financial Management and Budgeting in Business
Posted by admin in Financial Management on March 20, 2012
Finance is a key functional area of business management. This area is commonly referred to as Financial Management. The term defines the achievement of key financial objectives by making investment and financial decisions. Essentially, it is the management of all the processes associated with the efficient acquisition and deployment of both short and long-term financial resources. Financial Management assists an organisation’s management to reach its financial objectives such as the creation of wealth, solvency, liquidity, growth and return on investment achieved through a process of financial planning, control and decision-making.
Financial Control
Financial control consists of different strategies to manage finances necessary to achieve the primary purpose of every business; which is to earn profit. Budgets are the traditional financial control method and provide a measuring basis which performance can be assessed. By engaging in a yearly budgeting process a business can make plans and forecasts for the year ahead. Control action should be taken when actual performance appears not to be matching the outline of the budget. Therefore by monthly monitoring of expenses, controlling methods can be put into place when expenses becoming higher than figures stated in budget (such as spending cut backs or extra working hours). And by determining the reasons why figures do not match the yearly budget plan, a business can therefore make necessary plans for this not to occur in the future. Monthly monitoring of expenses is another example of a financial control. Such data includes cash balance, total wages costs and hours worked key sources of income, unusual or above budget expenditures. Read the rest of this entry »