The Differences between Time and Material Billing and Fixed Cost Billing
Time and Material Billing Time and material billing refers to the billing process wherein actual number of hours worked and the resources deployed are billed on an as is basis with the margin added to it. In other words, time and material billing refers to the billing that is done as per the actual number […]
Why Companies Engage in International Business
To Expand Sales The first and foremost reason is that western multinationals would like to expand their sales and acquire newer markets so that they can record impressive growth rates. Considering the fact that the developing countries are peopled with consumers who have aspirations to western lifestyles, it is, but natural that the western companies […]
Impact of Business Process Re-Engineering and Improvements
In the new world that is fast changing with rapid advances made in science and technology and shrinking borders, the academicians have had to discard the old theories of Management and rewrite the rules all over again. Bet it the marketing principles, human resource management or business processes, every topic needs to be redefined and […]
The Drivers of the BPO Phenomenon: Globalization, Economics and Geopolitics
The main drivers of the BPO phenomenon are globalization, economics and geopolitics. To elucidate, ever since the global economy started getting more integrated and interconnected, there has been a concomitant movement towards opening up of the economies of the developing countries to greater interaction with the west. This “flattening of the world economy” has meant […]
South Korea: A Stunning Success Story
Today, South Korea is one of the largest economies in the world. It is the 12th largest to be precise. However, the influence it has in global markets is significant. It is home to many multinational corporations which compete against the best in the world. For instance, American markets are flooded with Korean manufactured automobiles. […]
For an organization to succeed in the global and competitive world, it needs to have a robust strategic plan in place. The strategic plan is made of several definite targets it aspires to achieve. Some of the targets are internal (Productivity improvement, sound finance discipline, etc.) as well as external (EPS, Stockholder value, etc.). Therefore, organizations strategic consist of long-term planning, organizational development, treasury management and value management.
Financial planning and forecasting are integral part of strategic finance. Organization needs to develop strategic finance tools, which can take into account scenario analysis as well as modeling capabilities. A strategic finance tool should help in quickly developing finance models and evaluate various financial scenarios. These financial scenarios can suggest sophisticated debt and capital structure management. Strategic finance tools should be connected to enterprise performance management tools as well as other databases. A strategic finance tool should provide a convincing finance solution which further can be used to set internal targets, perform financial analysis and provide data to perform informed decision making.
Organization requires a robust and flexible finance tool to analyze ever evolving financial and business market. The finance tool should be capable of doing what-if scenario modeling. It should also allow development of finance models, which can be used to carry our impact analysis based on dynamic variables and reach targets, which can be assigned to other departments.
At present, most of the finance modeling is done through spreadsheets. However, these spreadsheets are somewhat difficult to manage, lack data integrity and do not integrate with other aspects of finance modeling like strategic planning and treasury.
Strategic finance module helps the organization in the sensitivity analysis as well as what if analysis allowing to gain deeper understanding of various strategic scenarios and develop business intelligence. Since the strategic finance tool is integrated with other business modules all possible disconnect between strategic targets, and operational plans are analyzed.
Finance modeling provides insight into impact of strategic decisions on company’s bottom line, cash flow, balance sheet and shareholder value. Strategic finance module provides the bridge between finance modeling and financial analysis. Its gives flexibility in developing finance models and measure impact on financial statements. Strategic finance modules have an in-built finance model which saves time from designing and developing spreadsheet based models. Finance modeling tools' users need not be trained in writing complex logic statements. The finance tool provides users flexibility of adding as many complexities as required. The finance tool provides users to invest more time in doing analysis and developing alternate strategies rather spending time in validating data.
Any strategic finance decision has a direct impact on cash flow of the company. In turn cash flow impacts the balance sheet, hence financial performance within the company. The strategic finance tool connects finance decision-making process to working capital management to capital structure to taxation. This connection adds value to organization and reduces overall cost of capital.
A strategic finance tool also has a consolidation module which provides the total view to decision makers.
Your email address will not be published. Required fields are marked *
Communication Systems and Groupware – Information System Concepts that Apply in All Functional Areas of Business
February 12, 2025
