Why Young Managers should know about Inventory Operations
When a management student passes out from college and is absorbed into any business organization, if he is lucky he will get to spend a few months in getting orientation in all departments before being assigned to a particular department or function at the end of the induction program. Those who get to be assigned […]
The Case against Free College Tuition
The Green New Deal proposal announced by Alexandria Ocasio-Cortez suddenly became a talking point in American politics. The United States was visibly split into two camps, one was of people who are supporting the socialistic ideas being purported by the Democrat leader whereas others who oppose her plan. In a rather surprising development, large swathes […]
Different Levels of a Process – Viable System Model
An organization can be viewed as a collection of processes. At the grass root level, an organization is nothing but an arrangement of humans and technologies in a specific manner to achieve pre-determined objectives. However, work is divided amongst various processes to increase efficiency and effectiveness. However the functions of all processes are not the […]
Why Governments, Businesses, and Other Stakeholders must prepare for the Coming Age of Longevity
The Shock of Gray: The Retiring Baby Boomers and the Challenges of Aging It is indeed a fact that we are living longer than before and it is also a fact that the percentage of the elderly in relation to the total population is increasing. Thanks to the miracle of modern medicine and the advances […]
The Apple iPhone Controversy
There has been a conspiracy theory amongst Apple iPhone users that Apple slows down the performance of the older phones. The critics of this policy believe that Apple does this to force the users to get rid of their old phones with performance problems. The move is aimed at forcing users to upgrade to newer […]
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.
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Communication Systems and Groupware – Information System Concepts that Apply in All Functional Areas of Business
February 12, 2025
