A39 - Analysis of Records and Finances in Real Estate Assessment

This report provides a detailed analysis of financial management practices within the real estate sector. It begins by examining day-to-day budget maintenance, including the importance of tracking expenditures and the differences between fixed and flexible budgets. The report then explor...Read More

A39 - RECORDS AND FINANCES IN REAL
ESTATE ASSESSMENT TASK 4

TABLE OF CONTENTS
Day-to-day maintenance of budget, including monitoring expenditure..........................................1
Alignment of financial plan with marketing activities and organisational objectives.....................1
Legislative requirements including provision for taxation..............................................................2
Client credit policies and debtor management.................................................................................2
Implementing and monitoring financial management procedures..................................................2
REFERENCE..................................................................................................................................4

Day-to-day maintenance of budget, including monitoring expenditure
There are varied sort of budgets that are commonly prepared by the business firms like
fixed and flexible budget. There is difference between both sort of budget as fixed remain static
across time period. Hence, there is no need to maintain fixed budget. However, if flexible budget
is prepared then same need maintenance because with passage of time period business
environment get changed and it is not necessary that estimated values will actually observed in
future time period (Brigham and Houston, 2012). Hence, on monthly basis budget need to be
maintained. Along with this, on time budget expenditure also need to be record in the books of
accounts so that actual performance can be measured along with estimated one. If results are
positive then there is no problem but if results are inverse then corrective actions need to be
taken to improve condition.
Alignment of financial plan with marketing activities and organisational
objectives
It is very important for the business firm to align finnancial plan in respect to maketing
activities and organizational objectives. This is because in the finanncial plan we determine some
of the tasks and in respect to same determine budget values. All these budgeted values are
prepared by consideirng marketing activities and objectives that are prepared by the managers
for the company. On basis of objective size and scope of business operations is planned. By
considering expansion plans activities that will be performed up to specific level is clearly
determined. Hence, by consideirng these determined activities financial plan is prepared. Thus, it
can be said that financial plan preparation largely depenedend on the orgnaizational objectives
and marketing activities. On basis of marketing activities it is identified that how much sale
company can made in its business. Accordingly all operations are performed and by considering
this for tasks budget need to be allocated (Higgins, 2012). Hence, it can be said that financial
plan must be prepared in alignment to marketing activities and organizational objectives of the
company. There is huge importance of financial plan because by using same cash is managed in
proper manner by the company.
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Legislative requirements including provision for taxation
As peer rules when any Australian company prepare a budget it need to prepare provision
for taxation separately in its business. This is because in large amount firms need to do cash
inflow and outflow in their business and bind by tax liability. It is mandatory for real estate
agencies like Ray White to prepare provision for tax liability so that managers have idea of
approximate tax payment liability and accoridingly it can manage cash in its business (Benson
and Davidson, 2010). All these things ensure that according to estimated tax liability expenditure
will be made in the business and cash will be utilized by the company in its operations. Thus,
while preparing budget there must be provision of tax in the relevant statement.
Client credit policies and debtor management
Debtor management is the one of the important area on which firm have to take a look to
evaluate condition. In many business firms it is observed that there are higher amount of debtors
and many of them prove bad debt for the company. Hence, due to this reason large amount of
cash get blocked in debtors. If some one become bad debt then it means firm is directly facing
loss in its business. In case in any specific year less amount of profit is earned in the business
then in that case higher bad debts may further affect firm negatively. Hence, it can be said that
firm must follow strict credit policy and under this it must give debt to the debtors only upto
limited amount and upto specific time period (Liu, 2010). By doing so it can be ensured that
there will be abudent amount of cash in the business and nil amount of bad debt. All these things
make firm condition more stronger with passgae of time period.
Implementing and monitoring financial management procedures
Financial management have wide scope and within it number of tasks are performed.
Some fo the core areas of finance where specific procedure is followed is given below. Revenue and income procedure: There is common procedure for income and under this
agency CEO in conjunction with Vice President of Fund Development and head of the
finance department determine reveneue that is targeted to be earned during financial year.
All these entities collectively determine that on which areas there is need to pay due
attention so that determined revenue can be earned in the business. Expenditure procedure: In respect to expenditure also specific procedure must be
followed by the company. In respect to expenditure all estimated values must be
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approved by the real estate agency CEO and Vice President. Standard costing records are
maintained by the accounts department of the company and managers try to make all
expenditures within determined limit so that cost can be managed within certain limit. Budgeting procedure: In respect to budget also specific procedure is followed and under
this agency CEO, head of finance and treasurer of the company collectively prepared a
budget and present same in front of Finance committee (Financial management policies
and procedures, 2017). At least 60 days before end of fiscal year budget is prepared by
the above mentioned entities. After approval from Finance committee and Board of
Directors on start of finnacial year budget is prepared by the company. Time to time
meeting is conducted between agency CEO, head of finance and treasurer as well as
Finance committee to identify any changes that need to be made in budget to make it
more realisitc and accurate with passge of time.
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REFERENCE
Books and journals
Benson, B.W. and Davidson, W.N., 2010. The relation between stakeholder management, firm
value, and CEO compensation: A test of enlightened value maximization. Financial
Management. 39(3). pp.929-964.
Brigham, E.F. and Houston, J.F., 2012. Fundamentals of financial management. Cengage
Learning.
Higgins, R.C., 2012. Analysis for financial management. McGraw-Hill/Irwin.
Liu, Z., 2010. Strategic financial management in small and medium-sized
enterprises. International Journal of Business and Management. 5(2). p.132.
Online
Financial management policies and procedures, 2017. [PDF]. Available through:<
http://www.mtnonprofit.org/uploadedfiles/files/org-dev/principles_and_practices/
mna_sample_docs/financial-management-sample-policies.pdf>.
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