Finance for non financial personnel - part 6

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Many non-financial personnel find finance is mystical and somehow cannot comprehend financial information.

The 8 parts of the presentation are designed to help the non-financial personnel to look at finance from their own view point. Instead of learn finance from finance perspective, we learn our own perspective.

This is because your goal is to improve your current work not to become a qualified accountant. Crash courses usually can’t provide sufficient knowledge for you to understand finance.

Designed from business’s viewpoint, different from other approaches found in the market. Hopefully, we can equip non-financial personnel with business driven financial knowledge.

By end of the 8 presentation:
1. You can create your value to increase financial value
2. You can interpret financial reports to make decisions
3. You know how to work on budget
4.You can propose your ideas in terms of dollars & cents
5. You produce the financial numbers that your boss likes
6. You can communicate well with finance department
7. You make collaboration with accountant possible instead of just for the sake of formality

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Finance for non financial personnel - part 6

  1. 1. Finance For Non-Financial Personnel Part 6 Business Driven Finance Insights For Laymen Estimation
  2. 2. £ ¥ € ₳ ₨$ The Structure of Finance For Non-Financial Personnel educational: free distribution 8 presentations altogether, if you cannot find all the links, kindly email care@3cthinktank.com to request Part 5 Part 6 Part 7 Part 8 Accounting systems - the systems are not that simple after all and how your own system integrates to them. Accounting systems are not IT systems! Estimation - any activity (you name it) involves estimation, how can you estimate better? Budget/ Forecast/ Plan. How the financial data so important to you? Lean & agile. Valuables take-away - how to work on numbers that please your boss? What numbers must you always look at? The hidden financial formula a boss must have. Decision making - interpret financial information, perform critical ratios analysis, read different reports, and use reports for specific needs. Use management accounting information for your own management needs.
  3. 3. £ ¥ € ₳ ₨$ Estimation Beyond Financial Information educational: free distribution
  4. 4. £ ¥ € ₳ ₨$ Why we need to estimate? educational: free distribution Only One Answer: “Because we don’t know the future!” If we already know the future, there isn’t any need to estimate at all!
  5. 5. £ ¥ € ₳ ₨$ educational: free distribution Complete Piece of Information for Decision Making Objectives Strategies Impacts Financial & non- financial numbers Perceive Solely rely on financial information to make decision is dangerous Good Information: “timely; reliable; relevant; fit for purpose; cost; complete ” Source: From Presentation Part 4
  6. 6. £ ¥ € ₳ ₨$ educational: free distribution To estimate accurately is one of the greatest assets in the world! Financial data play an important role for estimation, however ... Rule from complete piece of information: We must include financial information in each estimation but other information also very important.
  7. 7. £ ¥ € ₳ ₨$ Principle 2 Types of input data for Accounting information: 1. Historical 2. Estimate Only these two. Not that much right? Do you estimate? Record history to appraise results educational: free distribution Actual: What had happen Budget: What had committed Forecast: What I think will happen Plan: What I hope to happen Historical => Actual Estimate => Budget/ forecast/ plan Source: From Presentation Part 3
  8. 8. £ ¥ € ₳ ₨$ educational: free distribution Modelling is getting information about how something will behave without actually testing it in real life Extrapolation beyond the original observation range, the value of a variable on the basis of its relationship with another variable. Regression a statistical process for estimating the relationships among variables. Wild Guess to arrive at an opinion about (something) without having sufficient evidence to support the opinion fully Logic Reasoning the system or principles of reasoning applicable when estimating Value/ Religion Guides collection of beliefs, cultural systems, and worldviews that relate humanity to an order of existence. Here are some methods to estimate financial numbers
  9. 9. £ ¥ € ₳ ₨$ What Would You Like to Estimate? educational: free distribution ● Recruit new employee ● Working on budgeting ● To plan an event or project ● Plan for resource allocation ● Predict what to do next ● React to complex environment ● Detect possible failure earlier for good risk management TO NAME A FEW
  10. 10. £ ¥ € ₳ ₨$ Example: Recruit New Employee The Case: customer service manager wanted to recruit a customer service officer and approach to HR manager to advise on costing and HR matter. He also turns to finance manager to advise on the finance impact. Finance Impact: Profit lesser? Increase one more headcount as orders increase S/T Costs increase > sales increase Expect increase in assets Cash conversion more important Are the orders L/T or S/T? Modelling Regression Extrapolation Value/Religion Guides Logic Reasoning Wild Guess educational: free distribution
  11. 11. £ ¥ € ₳ ₨$ Example: Recruit New Employee The Case: customer service manager wanted to recruit a customer service officer and approach to HR manager to advise on costing and HR matter. He also turns to finance manager to advise on the finance impact. Finance Impact: Profit lesser? Increase one more headcount as orders increase S/T Costs increase > sales increase The cash conversion rate reduce to 20% Expect increase in assets Cash conversion more important Are the orders L/T or S/T? Modelling Regression Extrapolation Value/Religion Guides Logic Reasoning Wild Guess educational: free distribution
  12. 12. £ ¥ € ₳ ₨$ Example: Recruit New Employee The Case: customer service manager wanted to recruit a customer service officer and approach to HR manager to advise on costing and HR matter. He also turns to finance manager to advise on the finance impact. Finance Impact: Profit lesser? Increase one more headcount as orders increase S/T Costs increase > sales increase The cash conversion rate reduce to 20% Expect increase in assets Yes, orders increase 5 times in L/T GREAT! L/T net benefits > than now. Cash conversion more important Are the orders L/T or S/T? Modelling Regression Extrapolation Value/Religion Guides Logic Reasoning Wild Guess educational: free distribution
  13. 13. £ ¥ € ₳ ₨$ Example: Recruit New Employee The Case: customer service manager wanted to recruit a customer service officer and approach to HR manager to advise on costing and HR matter. He also turns to finance manager to advise on the finance impact. Finance Impact: Profit lesser? Increase one more headcount as orders increase S/T Costs increase > sales increase The cash conversion rate reduce to 20% Expect increase in assets Yes, orders increase 5 times in L/T GREAT! L/T net benefits > than now. Cash conversion more important Are the orders L/T or S/T? Modelling Regression Extrapolation Value/Religion Guides Logic Reasoning Wild Guess educational: free distribution Modelling suggests while S/T suffers a bit L/T gain much more. Is the market still the same in longer term? I need to estimate consumers’ behaviours.
  14. 14. £ ¥ € ₳ ₨$ ● You know how to use financial information for estimation ● You understand financial information is critical but you also know that you need to depend on other information ● You know how to use different methods to estimate financial numbers educational: free distribution Are You On Track? Look For Next Presentation: Finance For Non-Financial Personnel - Part 7
  15. 15. £ ¥ € ₳ ₨$ educational: free distribution care@3cthinktank.com 3CTT is a management consultant who advise and run projects for holistic business solutions, usually end-to-end, to improve business and make achievements. They cover all business functions with unique IT enhancements to increase companies’ competitive advantages, maximizing revenue, liquidity, & profit while designing highly effective organization. We had been recognised by many as Trusted Advisor, Growth Driver, Turnaround Expert, Exceptional Motivator, Strategist, Business Designer, and Dynamic Change Agent For more information: www.3cthinktank.com 8 presentations altogether, if you cannot find all the links, kindly email care@3cthinktank.com to request All the 8 presentations are the overview, PLEASE email us if you like to get more benefits from them.

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