Finance for the Non Finance

A Workshop for Managers of Non Finance Background

Saurabh Srivastava’s Program

for Management Executives
for the Non
Finance
 Your Name

Your Department

Years of Experience

Exposure To Finance

And A Fun Fact About You


 Finance Concept -
Objectives and Functions
 Accounting Books – Financial
Statements
 The Process of Finance
Management
 Functions and Goals of
Finance
 The Concept of Budgeting
 The Concept of Wealth
Maximization
 Creating A Cost Conscious
Mindset
The Concept Of Finance
Financial Management is concern with
the Accusation , Financing and
Management of Assets.

No Business can utilize its complete

Potential for growth & expansion
without proper administration &
utilization of finance

Financial Management is the Key to

Successful Business Management.
 Objective of Financial Planning

 Help Business Analyze Resource

 Help Business Determine Viability
 Action Plan For Financial weakness
 Financial Resource for meeting Goals
 How much Resource required for investment

”A finance person ensures that the scarce

financial resources are maximally utilized in
the best possible manner at least cost in
order to get maximum returns on investment.”
The Finance Management Process
Books of Accounts – A Concept
Look at it from the view Central Books of Accounts
of Finance Department that you deal with
• Sales and Purchase Leaguer

• Profit and Loss Statement

• Income Statement

• Balance Sheet

Lets observe
the next
slide……!
The Balance Sheet
Income Statement & Connection to
Balance Sheet
 Goals & Objectives of
Financial Management
What is a budget?
 The Budgeting Steps
Budgeting is the process of setting financial goals, forecasting future
financial resources & needs, monitoring & controlling income &
expenditures, & evaluating progress toward achieving the financial
goals.
 Budgeting process – Simplified
Setting goals
Making decisions
 Gathering Data
Forecast Future Needs
Implementing the Budget
Controlling the Spending
Evaluating Performance
Lets Make a Simple Budget
 How to Control Budgets
• Control where money goes
• Reduce Impulse Spending
• Plan for Intermittent Things
– Holiday gifts, April taxes,
summer AC bills, vacation,
semi-annual car insurance.
• Plan to smooth out expense
– Budget Insurance & utilities
– Make your own specialized
sub-accounts
Caution
1. Keep Running Remaining
balance of Each Budget
category.
2. Using Envelope System
 Don’t Try to pay cash each
time Put extra in envelope at
start of month.
 Don’t take from the One
envelope to pay Another
envelope.
 This video describes
the master budget, a
series of interrelated
budgets that set the
course for an
organization's sales,
production, and
financial goals.

Beginning with the

sales budget, each
 Wealth / Profit Maximizations
What is Wealth Minimizations?
• Wealth or Value of a business
is defined as the market price
of the capital invested by
shareholders.
• Wealth Maximization is the
concept of increasing the
value of a business in order to
increase the value of the
shares held by Stock holders.
What is Profit Maximizations?
• Profit Maximization is a term
which denotes the maximum
profit to be earned by the
organization in an given period
of time
• Profit Maximization implies
that the investment , finance
and dividend decision should
be oriented to Profit
Maximizations.
 The Conflict of Better Approach
Profit Maximization Wealth Maximization

 Its main objective is to earn large  Its main objective is to achieve

amount of profits highest market value of stocks

 It emphasizes on Short term goals  It emphasizes on the long term

goals and returns
 It ignores the time value of
money  It considers time value of money

 It ignores risk and uncertainty  It recognizes risks and uncertainty

 It ignores the timing of returns  It recognizes the timings of

returns
Analyze -Which is Better for
Organization
Wealth Management
Diagram
Cost Conscious Mindset ?
Why a Cost Conscious Mindset ?
 Why a Cost Conscious Mindset ?
• Cost consciousness is very • The next generation of
significant because almost leaders will demand
always , we’re building a more collaborative ,
promising culture, engaging, integrated and
within an organisation intuitive approaches to
working.
• Culture always underpins
your organisation’s broad • A culture committed to
corporate values and cost and compounding
business strategies – and value to deliver long-
therefore your success. term shareholder value.
U.S. Transportation Security Administration
The TSA launched an “Idea factory” in 2007, a secure online site
that allowed employees to submit ideas for improving agency
operations and processes.

– Employees review ideas on the site and vote for those most worthy of
management attention.
– These ideas are then publicized and recognized. In less than two years,
nearly 8,000 ideas were submitted, receiving over 69,000 comments.
– Of the presented ideas, 39 have been implemented.

Now what we see here :-

All the Big Players are Moving towards the COST CONSCIOUS MINDSET

CASE STUDY 1
 A Commercial Aviation provider with more than $2Billon
procurement already spend, asked his people in the organisation
to reduce costs, without damaging customer value.
To achieve this, we set about designing a world-class cost program that would
 Instil a culture of disciplined financial management across the business
 Build competitive advantage through clear focus on the customer
 Secure a profitable future upon which to deliver greater shareholder value

Grounded in analytics and embedded through cultural change, The Company developed a
proprietary approach toward ‘Optimising Supply Chain Costs’
– Comprising an opportunity diagnostic, current and future state value chain analysis,
tailored procurement training and the development of pragmatic action plans.
– The program was also underpinned by a formal change and communications strategy.

By having a clear understanding of customer value against which to assess cost

reduction strategies, organisation developed a 12 month cost management
plan with the CFO and ultimately provided the Board with confidence in their
ability to control costs, deliver shareholder value and delight the customer.
What is the Point? What are we learning?
The point is to not to
forget about service
delivery. The proposed
culture shift
balances program
delivery with cost
management.
Cost savings realized
through the immediate
implementation of
these initiatives can be
reinvested to provide
better value to clients in
future and at present .