Managing Finance

This assignment focuses on the skills of financial management, understanding finance within an organization, impact of financial objectives on decision making, management accounting and financial accounting, impact of organization and regulatory framework, and challenges faced by organizations in finance.

Running head: MANAGING FINANCE
Managing Finance
Name of the student:
Name of the university:
Author Note:

1MANAGING FINANCE
Table of Contents
Introduction:..................................................................................................................2
Discussion:....................................................................................................................3
1. Understanding Finance within Organization..........................................................3
1.1 Relationship between the financial function and other functional areas............4
1.2 Impact of financial objectives on decision making within organization...............4
1.3 Management Accounting and Financial Accounting...........................................5
1.4 Impact of Organization and Regulatory Framework...........................................6
1.5 Challenges Organization Faces in Finance........................................................7
2. Set and Manage Budget........................................................................................8
2.1 Budget Setting and Financial Forecasting..........................................................8
2.2 Budget Setting Approach Used by Organization................................................9
2.3 Financial Budget...............................................................................................10
2.4 Factors that impact on Budget..........................................................................10
2.5 Corrective Measures taken in case of budgetary variance..............................12
2.6 Reporting Procedures for authorizing corrective actions of the budget...........13
Conclusion..................................................................................................................14

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Introduction:
The aim of the assignment deals with the unit of 520 in managing finance of
the business. Financial management skills are essential for the managers in the
upper level management apart from whether there is dedicated finance team within
an organization. Financial shrewdness further enhances decision making skills,
which provides support to the management related projects, tasks and functional
areas. Basically, the implication of the unit has been designed to enable learners to
understand how financial systems performs within an organization. Learners will
evaluate the sources of finance for organizations, and understand the principles for
setting and managing budgets in line with regulatory and organizational guidelines.
This unit has been designed to enhance the learner’s confidence and credibility in
financial management, which will translate into improved management skills1.
The leadership and the management decisions of the company must be
effective and the parameters which are needed to improve it are depicted in the
conducted study. The significant management responsibilities are discussed along
with the changes which are made accordingly. The regulatory framework of the
company have been discussed along with the necessary measures which must be
undertaken are also evaluated. The budgeted forecast of the IT organization has
been depicted along with the variances of the company has been made. The
changes which must be made by the upper level management of the company has
also been highlighted accordingly.
1 Freeman, Richard. Managing open systems. Routledge, 2014.

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Discussion:
PART A – FINANCE FUNCTIONS OPERATIONS
This unit mainly focuses on the skills of the financial management which are
significant for the managers apart from whether there is an enthusiastic finance team
within an organization. Financial shrewdness generally enhances the decision
making skills within an organization which further supports the management for the
projects, tasks and the functional areas performed within an organization. The main
implication of the particular unit is that it is actually designed in order to enable the
learners to understand the financial system which is operated within an organization.
The principles are needed to be understand in that scenario for setting and
managing the budget within the regulatory and the organizational guidelines. The
unit has been designed to further enhance the confidence of the learners and further
the credibility in the financial management will further improve the overall
management skills.
1. Understanding Finance within Organization
The key functions of the financial management are the financial planning where
the main motive of the management is to increase the flow of cash in the business.
The investment of the business must be effective in order to improve the overall
financial wellbeing of the organization in that case. The key tools which are used to
analyze the ICT Engineers are the Skills Matrix (Excel Spreadsheet) and Ivanti (Call
logging system). These tools helped the IT organization to analyze drive quality,

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measure performance productivity, preventing poor performance and further
identifying talent and potential.
1.1 Relationship between the financial function and other functional areas
It is needed to understand the financial situation of the organization by further
analyzing the financial functions and the other key functional areas of the IT
organization. In order to understand the skill measurement of the ICT engineers
there are some application of tools and techniques. Further this tools helps to
understand the existing skills, identifying the shortage in the skills and other
mismatches and then train people in order to improve their performance. It is needed
to manipulate the cost as per the current financial performance of the organization.
The financial functions in the organizations are basically within the macro level and
the project office teams treat in the same micro level.
The role of the finance department of the organization is that to manage the
business functions associated in the financial department. The main business
functions are the planning, organizing, staffing, directing and controlling the financial
situation of the company. The role of the financial function is to evaluate the financial
information’s. The financial departments used to calculate the Net present Value,
Future Value, Present Value of the company and many more. The above discussed
functions are the tools which are used to analyze the current financial position of the
company. The decision undertaken by the financial management plays significant
role regarding the acceptance or rejection of the projects in that case. The goals of

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the financial management are to make decisions in order to accomplish the financial
goals of the organization.
1.2 Impact of financial objectives on decision making within organization
The objective of decision making in corporate finance is to maximize the value
or the stock price of the firm. The financial objectives of the company are based on
the size of the company and business of the company. The significance of financial
decisions in the business is based on various factors in order to provide the growth
in the overall business of the organization. The main reason behind the business
failures is that the lack of financial planning, lack of capital, limited access to funding,
unplanned growth, low strategic and financial projections, excessive fixed asset
investment and capital mismanagement. The above mentioned failures are the
challenges for an organization which must taken care by the upper level
management of the company. The management in this particular situation needs to
take stringent financial strategies which must be implemented by the organization in
this kind of circumstances.
In an organization there are various kind of strategies which are involved in
the decision making of an organization which are the investment decision making,
funding decision making and working capital management of the company.
Analyzing the financial position of the company for the last five years or more will
automatically provide a clear picture to the management of the company for taking
decision in that case. The performance of investment, funding and the working
capital management of the company must be analyzed for the last 5 years or more
will further help the managers of the company in order to take decisions in that case.

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The year is basically the time which is used as a parameter for the organization in
order to take managerial decision2.
1.3 Management Accounting and Financial Accounting
The term accounting refers to the recording, classifying and summarizing the
monetary terms which are the day to day business transaction and further
interpreting the results of the company. Based on the evaluation of results, the upper
level management of the company takes certain decision in order to improve the
overall financial position of the company in that case. Financial accounting deals with
the preparation of the financial statement along with the income statement and
balance sheet.
The financial accounting covers the entire financial aspects of the company, while
on the other side the management accounting deals with the performance of the
products and costs related aspect of the company. In case of the managerial
accounting, the reports of the IT Company are generated based on daily, weekly or
monthly basis. Report are used by the upper level management in order to forecast
the performance of the business. But the financial reports are prepared based on the
period of time which is based in term of years.
Management accounting is also referred to as the branch of accounting which
deals with the financial reports and further used by the upper level management of
2 Business Insider. (2019). PERSONAL FINANCE MANAGEMENT: How banks should use
personalized services to increase customer satisfaction and compete with fintechs. [online]
Available at: https://www.businessinsider.com/personal-finance-management-b-2018-8
[Accessed 8 May 2019].

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the IT organization. These preparation of the reports are basically used by the upper
level management of the company for the purpose of decision making. This report
includes the sales forecast reports, budgetand comparative analysis, feasibility
studies along with the potential merger and the consolidation reports. Whereas the
financial accounting on the other hand deals with the production of the reports for the
IT organization which includes the basic reporting requirements which are the
profitability, efficiency , liquidity and solvency. This are the main parameters which
are considered here in order to evaluate the overall financial performance of the IT
organization 3
1.4 Impact of Organization and Regulatory Framework
The financial management of the company must be effective which further
means that strong financial management along with effective regulatory framework
within the organization will automatically maximize the profit in the short term. In
case of long term aspect,it will further help the company to increase the value of the
shares. Effective financial management would further bring transparency in the
figures and values of the business. The rules and regulation adhere must be duly
followed by the company in order to achieve its potential business growth. The
management system must utilize the effective tools and techniques associated with
the organization in order to bring accuracy and transparency in the overall financial
report of the company4.
3 Ulbrich, Holley H. Public Finance in Theory and Practice Second edition. Routledge, 2013.
4 Progressio.org.uk. (2019). [online] Available at:
http://www.progressio.org.uk/sites/progressio.org.uk/files/4_Managingfinances.pdf
[Accessed 8 May 2019].

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The company must always concentrate on the overall production of the
business and try to minimize the cost of production. The profitability of the business
must be maximized and the company must further keep in mind about the current
economic situation. The IT organization must also ensure that effective flow of
working capital in the firm which will automatically enhance the firm’s capacity to
meet the current obligations of the business. The internal management of the
organization must be responsible for the glitches in the system. It is then needed to
remove the potential glitches from the system. If the operation of the company is
constantly decreasing then it is the duty of the upper level management of the
company in order to focus on the regulatory framework5.
Certain changes in the regulatory framework will automatically boost the
performance of the company. The term regulatory and conceptual frameworkmeans
the set of rules and regulation associated in the accounting process. It is hence
significant for the management to follow certain rules which are further based on the
accounting standards.
1.5 Challenges Organization Faces in Finance
There are various challenges faced by the organization in case of recording or
at the time of data entry. The potential errors in accounting are the error of omission,
error of commission and many more. The organization must be error free and also
be careful regarding the adjustments in the reports. The example related to the
PESTEL analysis has been provided in the following table:
Element Factor Business Impact
Political The element that has been What is the business impact of this
5

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identified
The key issues which are
reflected here is that government
spending and funding in the new
projects. The political factors and
decision taken by the government
is ineffective.
factor
This will definitely create impact on
the project which is adopted by the
organization. Government funding in
the new projects are significant in
order to improve the overall business
objectives and further enhance the
productivity in the business.
Economic
Inflation is one of the main
economic issues which are faced
by most of the organization in
recent days. The economic
challenges and the global
economic system create a lot of
problem in the system of the
organization.
This factor actually puts impact in the
pricing strategy of the goods and
services provided by the organization.
Hence, in such a situation the
company needs to adopt some of the
main policies in order to improve the
business through effective
productivity and pricing strategy in
such a situation.
Sociological The main social challenges which
are faced by most of the
organization is that poverty and
the 6poor education system. There
Each and every organization have
certain objectives towards the
corporate social responsibility which
the company needs to ascertain as it
6 Doherty, Tony L., Terry Horne, and Simon Wootton. Managing public services-
implementing changes: a thoughtful approach to the practice of management. Routledge,
2014.

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are other various social factors
which are caused in the society7.
directly or indirectly creates impact on
the sociological factors of the
business.
Technological
The key challenges in the IT
industry is regarding the security
issue or rather the cyber crime in
finance. Stealing the big data
through the process of cyber
hacking is a major issue in that
case
This will create definite impact on the
performance of the business in such
a way like certain loss of big data.
This will definitely harm the overall
production and record keeping of the
business.
Legal
The misrepresentation in the
financial statements of the
company affects the growth of the
business. This happens as there
includes lots of glitches in the
rules and regulations or the
regulatory framework of the
company.
This create impact on the framework
and policies adhered by the company.
In such a situation the company
needs to revise the current norms and
improvise some of the new policies
for the business perspective.
Environmental
The environmental challenges are This further impacts the business in
7 Vernimmen, Pierre, et al. Corporate finance: theory and practice. John Wiley & Sons,
2014.
Ulbrich, Holley H. Public Finance in Theory and Practice Second edition. Routledge, 2013.

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the usage of plastics and gas
omission by the company which
generally increases the pollution
of the company in various
manne8r. This pollution actually
harms the environment.
various ways like it generally hamper
the reputation or goodwill of the
company.
PART B – MANAGING FINANCE
Budget of the company refers to the set of organizational goals and plan
executed in order to accomplish the overall objectives of the organization in the
coming months. Mainly the budget is forecasted on the current performance of the
business in an organization. Budget actually involves the basic goals and objectives
associated with the organization. The budget also helps to evaluate and further track
the current performance of the business in an organization.
2.1 Budget Setting and Financial Forecasting
The financial forecast of the company is based on the current and past
performance. In case of each and every organization, the firms tries to increase the
rate of efficiency which the company will be achieving in the coming years. In this
way the organization sets targets by executing the whole scenario by considering
some of the key financial aspects and parameters in this case. In budgeting, the
8 Graham, Anne. Managing Airports 4th edition: An international perspective. Routledge,
2013.

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targets are time based and quantifiable which means that the increase in the volume
of sales in the production process of the business
Budgeting is powerful tool used in order to manage the financial position of
the business. This further helps the management to execute financing of the assets
along with the projected balance sheet. The management of the company adopts
certain policies and strategies in order to enhance the current performance along
with the future perspective of the business
2.2 Budget Setting Approach Used by Organization
Basically budget is the outline expectation which the organization is trying to
achieve in a particular period of time. The approaches used in the financial
budgeting are the estimation of revenues and expenditures along with the expected
cash flow system of the company. Budgeting and financial forecasting are the two
major concepts where the financial forecasting estimates the amount of revenues
which will be achieved by the company after a certain period of time.
The financial budget represents the overall financial position, cash flows and
the goals along with it. The company’s budget actually evaluates the periodic
performance which mainly depends on the management system and information
related to the financial aspects of the business. By examining the future financial
outcomes of the business from the historical data, accordingly strategies are taken
by the company in order to accomplish the overall objective of the firm in terms of
setting the budget. Regular update is done on the operation, inventory and the
business plan. The management team utilizes the forecasted financial data along
with the changes associated with it in order to take immediate action regarding the
loopholes in the systems

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PART C – BUDGETARY CONTROL
2.3 Financial Budget
From the above evaluation of the projected financial budget of the company has
been forecasted by considering all the basic and additional requirements. From the
evaluation of the above table it can be interpreted that from the budgetary expenses,
the actual are slightly high which a good factor is the prediction is almost equivalent
to the resultant output. The actual findings are comparatively higher than the budget
which the management of the company needs to find reasons behind such huge
variance. The above budget table further signifies that the strategy which is adopted

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by the management is effective regarding the formulation of such effective budget by
ascertaining the fundamental risk associated with it.
The expenditure in the budget of the company must be analyzed in a detailed
manner. Accuracy in forecasting the expenditures of the business is hereby
significant in order to predict the revenue in the business. The main motive of every
company while preparing the budget is to consider revising the expenditures in order
to minimize it. Increased revenue in the business will automatically increase the tax
which the company needs to keep in mind and hence take necessary actions
accordingly. The economic and the current market situation create impact on the
financial forecast of the company in various aspects. If the rate of return outperforms
the prediction in the budget, then the company will likely to have potential surplus out
of such financial forecast.
2.4 Factors that impact on Budget
The factor which creates impact on the budget is the economic and political
factors. The certain changes in the authorities of the organization also create
potential impact on the budget. The organization needs to focus on the changes
related to these factors or rather the targets which are set by the management in
such circumstances. Hence identifying the potential political and economic factors
are significant for the organizationin that case. The change in government of the
country will also put impact on the overall performance of the financial management
of the company.
The necessary measures are needed to be taken and various facts must be kept
in mind by the high level authorities in order to bring some of the significant changes
in the organization. The political factors may or may not influence he financial

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position of the business. In order to enhance performance of the business as a
whole the company needs to increase the level of production. It will only be possible
to increase the level of production by considering the cost which is incurred for the
initial procurement of raw material. Hence in this situation the inflation rate varies on
the economic and political factors associated in the country. The company needs to
forecast the impact of the economic and political factors in the business. Accordingly
it is significant for the company to take decision in order to improve the overall
performance of the business.
Apart from that, the prediction of the budget creates impact positivelyor
negatively, when the actual revenue received is not as much as the anticipated one.
The above discussed externalfactors affects the revenue in various way such as the
economic downturn, unexpected competition causing the lower sales along with the
inability to sustain the level of growth needed. There are also the internal factors
which are the inadequate collection and improper account receivable management
of the company will also create negative impact on the revenue of the company.
Aggressive projection assumes that higher rate of growth or rather increase in the
revenue of the business shows much greater potential of inaccuracy, rather than the
conservative way of predicting the previous year’s data.
2.5 Corrective Measures taken in case of budgetary variance
The significant role is played by the management of the company in terms of the
budget variance. The variance takes place when the actual differs from the predicted
budget made in the system. The company in that case needs to take preventive
measures in order to understand the reason behind such difference. The variance

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may be favorable as well as unfavorable for the business of the organization9. The
positive variance of the company refers to that variance when the actual amount of
the company exceeds the budgeted amount. The negative variance of the company
refers to that variance when the budgeted amount is higher than the actual amount
of the company; hence the actual amount falls short on the budget. 10
The effective can be analyzed from the cash flow statement of the organization
where entities cash is being generated is cash inflows, and where its cash is being
spent is cash outflows, over a specific period of time usually quarterly and annually.
It is important for analyzing the liquidity and long term solvency of a company. The
cash flow statement uses cash basis accounting primarily used for preparing balance
sheet and income statement of the organization. This is significant as company may
accrue accounting revenues but may not actually receive the cash
Effective investigation regarding such major variance can result in the decrease
of such variance in the future. This depends on the potential of the management to
identify the glitches associated with such major variance in the business. Managers
of the company must execute the reason of such variance and must take effective
measures in that case In case of shortfall or losses in the variance it indicates that
company is ineffective to forecast the performance of the business. Hence the upper
level management of the company must take certain steps to bring transparency in
9 GotQuestions.org. (2019). What does the Bible say about managing your finances?. [online]
Available at: https://www.gotquestions.org/managing-finances.html [Accessed 8 May 2019].
10 Wikihow.life. (2019). The Best Way to Manage Your Finances - wikiHow. [online]
Available at: https://www.wikihow.life/Manage-Your-Finances [Accessed 8 May 2019].

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the forecast. Due to the external disturbances or problems is the main reason behind
the huge differences in the shortfall of the company11. In case of the static budget,
the actual variance is similar to the budgeted variance of the company. This further
means that the company is effective in predicting or rather making the financial
forecast.12
2.6 Reporting Procedures for authorizing corrective actions of the budget
Budget monitoring plays significant role which is the comparison of the actual and
budgeted income and expenditure. SAP is software used to prepare budgetary
reports which further minimizes cost and risk, enhances the business operations
through productivity and financial management. Based on the preparation of the
report, the upper level management of the company must take corrective measures
13in that case. Improving some of the business parameters will definitely improve the
overall performance of the IT Company 14
11 Wikihow.life. (2019). The Best Way to Manage Your Finances - wikiHow. [online]
Available at: https://www.wikihow.life/Manage-Your-Finances [Accessed 8 May 2019].
12 Managementhelp.org. (2019). All About Financial Management in Business. [online]
Available at: https://managementhelp.org/businessfinance/index.htm [Accessed 8 May 2019].
13 Koller, T., Goedhart, M. and Wessels, D. (2015). Valuation. Hoboken, N.J: Wiley.
14 The Balance. (2019). 5 Steps to Managing Your Personal Finances. [online] Available at:
https://www.thebalance.com/manage-your-personal-finances-2385812 [Accessed 8 May
2019]

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Conclusion
From the above discussion it can be concluded that, the managers in upper
level management of the business takes initiative in order to improve current
business of the company. The whole assignments are rather divided into three
sections which are the operations related to the financial functions, managing
finance and the budgetary control. In case of the financial function within an
organization as well as the challenges faced during the process has been outlaid in
this assignment. In case of managing finances, the operation and the financial
performance within an organization has been depicted in the conducted study. It is
significant for the organization to analyze the past performance and the glitches
associated with it in order to rectify it for enhancing the overall performance of the
organization in recent and coming years. Necessary budget has been formulated in
order to certain the accumulated risk and strategies involved with it. Details of the
budget and further the corrective measures which are needed to be taken are being
depicted in this assignment.
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19MANAGING FINANCE
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15

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http://www.progressio.org.uk/sites/progressio.org.uk/files/4_Managingfinances.pdf
[Accessed 8 May 2019].
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personalized services to increase customer satisfaction and compete with fintechs. [online]
Available at: https://www.businessinsider.com/personal-finance-management-b-2018-8
[Accessed 8 May 2019].
Freeman, Richard. Managing open systems. Routledge, 2014.
Doherty, Tony L., Terry Horne, and Simon Wootton. Managing public services-
implementing changes: a thoughtful approach to the practice of management. Routledge,
2014.
Stewart, Bob. Sport funding and finance. Routledge, 2017.
Graham, Anne. Managing Airports 4th edition: An international perspective. Routledge,
2013.
Vernimmen, Pierre, et al. Corporate finance: theory and practice. John Wiley & Sons, 2014.
Ulbrich, Holley H. Public Finance in Theory and Practice Second edition. Routledge, 2013.16
16.

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