Refresher Course on

Financial Management for Cooperatives

and People's Organization

ATTY. RHENEIR P. MORA, CPA

Resource Speaker

Cebu Investments Development Concierge Center (CIDCC)

2

Outline of the seminar

▸Topic 1 – Basic Concepts of Financial Management

▸Topic 2 – Objectives of Financial Management
▸Topic 3 – Sources and Uses of Funds of the Organization
▸Topic 4 – Cash Management
▸Topic 5 – Receivable Management
▸Topic 6 – Inventory Management
▸Topic 7 – Keys to Successful Investments
3

BASIC CONCEPTS
OF FINANCIAL
MANAGEMENT
4

Financial Management

Planning
financial
Organizing
activities
Directing
Controlling
procurement utilization

MONEY
5

Financial Management

Financial Management is also application of the

5 General Principles of management :
Planning
Organizing
Leading
Controlling
Staffing
6

Financial Management

1.Planning : Principles:
- Decision making process
▹ Preparation
- Develop Enterprise vision,
▹ Forecast mission and Strategic
▹ Setting up planning
▹ Scheduling - Forecasting the Long
term and medium term
plans
7

Financial Management

2.ORGANIZING : Principle:
- to form something , -Manpower Recruitment
- To bring people Training and
together into a development
structured group -Job and person matching
- to apply efficient - Limitations of Officers and
working methods to employees on control
make somebody work
and measures
effectively
8

Financial Management

3.Directing /Leading: Principle:

- Supervise and -Understanding human/
monitor the work leadership behavior
- Instruct what and - Understanding needs
how to do and motivation
- Focus on something - Group dynamic
- Communication
9

Financial Management

4.CONTROLLING : Principle:
- Exercise power or ▸ Control process and
authority techniques
- Restrain or limit, ▸ Information technology(IT)
and adoption
restrictions ▸ Operations management
- Regulate the ▸ Resolving conflicts
financial affairs of a ▸ Management of change
business ▸ Organizational development
10

Financial Management

5.STAFFING: Principle:
- Defines the authority,
responsibilities and ▸ Operational Structure
accountabilities of ▸ Levels of management:
the job . ▹ top management
▹ middle management
▹ lower management
11

OBJECTIVES OF
FINANCIAL
MANAGEMENT
12

OBJECTIVES OF FINANCIAL MANAGEMENT

Generally ensure the following:

▸ Procurement
▸ Allocation
financial
resources
▸ Control
13

OBJECTIVES OF FINANCIAL MANAGEMENT

Specifically, it aims to ensure:

• regular and adequate supply of funds .
• adequate returns to the shareholders
- depend upon the earning capacity,
- market price of the share,
- expectations of the shareholders.
14

OBJECTIVES OF FINANCIAL MANAGEMENT

▸ Specifically, it aims to ensure :

- optimum funds utilization.
√ safety on investment and adequate rate of
return can be achieved.
√ sound capital structure- composition of
capital is balanced and maintained between
debt and equity capital.
15

SOURCES AND
USES OF FUNDS
16

SOURCES OF FUNDS ….. Asa Gikan ang Kwarta?

▸ Share Capital
▸ Borrowings
▸ Donations/Grants
▸ Revenues – Sales/Services
▸ Disposal of Fixed Assets
▸ Interest on Deposits
▸ Other Sources
17

USES OF FUNDS ….. Asa gamiton ang kwarta?

ü Capital expenditures
ü Procurement of goods for sale
ü Operating expenses
ü Distribution of patronage refund and interest
ü Community outreach activities
ü Withdrawal of members
ü Payment of borrowings
ü Buy back its own stocks
ü Remittance to gov’t agencies – SSS, PHIC, HDMF
18

CASH
MANAGEMENT
19

CASH MANAGEMENT

ü Cash is the lifeblood of the business and a business

needs to generate enough cash from its activities so
that it can meet its expenses and have enough left
over to repay its investors and grow the cooperative.

ü Cash management refers to the collection,

disbursement and investment of cash.
Maximum Liquidity = Maximum Profitability
20

CASH MANAGEMENT

ü Cooperative has to generate adequate cash flow from its

business in order to survive.
ü Without generating adequate cash to meet its needs, a
business will find it difficult to conduct routine activities
such as paying suppliers, buying raw materials, and
paying its employees.
ü Cash management encompasses how a cooperative
manages its operations, financial investments and
financing activities.
21

INTERNAL CONTROL OF CASH

CASH ON HAND
ü Cash collections should be kept in a safe place;
ü Collections to be deposited in the bank;
ü Maintain petty cash fund or revolving fund;
ü There should be a cash book or daily location record
book;
ü There should be surprise cash count;
ü Vouchers to be approved by manager;
22

INTERNAL CONTROL OF CASH

CASH IN BANK
ü Bank signatories should be appointed the Board of
Directors:
ü All bank accounts under the cooperative;
ü Blank checks should be physically controlled;
ü Bank accounts reconciled regularly.
23

RECEIVABLES
MANAGEMENT
24

RECEIVABLES MANAGEMENT

ü Ensure that borrowers pay the dues on time;

ü Helps business from running out of working capital in
any point in time;
ü Prevents overdue payment or non-payment of the
pending amounts from customers
ü Builds the business financial and liquidity position of the
cooperative.
25

RECEIVABLES MANAGEMENT

The process involves:

ü Credit rating
ü Continous monitoring of risk of non-payment and delay
in receiving payments
ü Customer relations should be maintained
ü Addressing complaints of customers
ü After receiving payment, posting immediately to
subsidiary ledgers
ü Prevent bad debts outstanding
26

INTERNAL CONTROL OF RECEIVABLES

ü Periodic aging of receivables

ü Write-offs and adjustments should be approved by
officer
ü General ledger and subsidiary ledger regularly
reconciled
ü Delinquent accounts to be reviewed periodically by
officer
ü Statement of accounts to be sent regularly
especially to those delinquent ones
27

INVENTORY
MANAGEMENT
28

INVENTORY MANAGEMENT

ü Basic inventory management system (IMS) ensures

the appropriate level of products are kept on hand
to serve customers without tying up capital in an
unproductive fashion.

ü The best IMS will not only keep count of products

but also provide actionable business intelligence
such as identifying high and low performing
products and sending re-order notifications when
stocks are low.
29

INTERNAL CONTROL ON INVENTORY

ü Purchaser should not be the same person as the

warehouseman;
ü Physical goods under the custody of warehouseman.
ü Accumulation and sale of scrap should be under
control.
ü Physical count of inventory to be done regularly.
ü IMS should report slow moving, obsolete and over-
stocked items.
ü Proper control to consigned-in and consigned-out
goods
30

The 5 Principles of
Financial Success
31

The 5 Principles of Financial Success

- These Principles form a True wealth means having

foundation to build and enough money to :
expand your money ▸ live a joyous,
consciousness.
▸ vibrant,
- The principles are guidelines ▸ richly fulfilled lifestyle,
for the support of clear
financial intentions ▸ a healthy vital body, and
- They are powerful and potent ▸ nurturing, loving
transformational true wealth relationships.
principles.
32
1st Principles of Financial Success

• Complaining and blaming is a focus on

Stop the past, and worry is a fear of the
complaining, future, neither of which generates
money in the present
blaming and • Complain, blame and worry about
worrying money because it is a habit or feel
empty mind
about • Spending emotional time and energy .
money. • It drains energy that could be used
productively to generate money.
33
2nd Principles of Financial Success

Eliminate the • Most people insist on being right about

need to be the way the money is generated or
received.
right about • It limits in some significant ways.
receiving/ • A box is created around our financial
well being that is defined by our beliefs,
generating judgments, and assumptions.
money.
34
3rd Principles of Financial Success

Be current • Avoid unresolved financial matters,

such as old debts, is like carrying
and complete around a ball and chain of the past.
• Stay up-to-date and pay attention to
on all money details.
financial • Open and pay bills in a timely manner.
• Balance check books and keep your
transactions. financial house in order.
35
4th Principles of Financial Success

Think before • Compulsive, impulsive spending

usually leads to guilt and regret,
you buy giving the subconscious mind a
or do not powerful negative money
message.
spend • Be a good steward of the
at all. resources .
36
5th Principles of Financial Success

Communicate • Many people get themselves into

money stress rather than tell the
openly and financial truth to themselves and others.
honestly • Willingness to see the truth, speak from
the heart (without stories that keep the
with yourself truth hidden), and
and • with kindness and respect to others and
ourselves makes it safe to have
others. massive amounts of money.
37

▸ THANK YOU

▸ ANY QUESTIONS