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Financial function - Coggle Diagram
Financial function
Credit
Forms of credit:
Open account
Revolving credit
Instalment credit
Other forms( overdraft, personal lending)
Advantages for granting credit:
Increase in sales
Increase in market share
Sell more expensive products/ services
Cross selling to customers
Retention of consumer base
Easier to exchange and adjust returned goods
Aiding advertisement and communication
Increasing profit
Disadvantages of granting credit:
Higher admin and operational costs
Possability of late payments
Likelihood of bad depts
Increased need for capital
Importance of credit sound policies
Will we sell on credit
What kinds of goods and services will qualify for credit
Will there be a selling price differentialtion between cash and credit sales
What criteria and procedures will the business use for assesing cllient applications for credit
Who will be authorised to acesses and decide how to extend credit to a cutomer
What will the conditions be
How will we manage accounts in arrears
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Implementing credit decisions:
Confirming the outcome of an application
Signing a formal agreement
Ensuring efficient and effective administration
Controlling debtors accounts
Sound administration
Follow-ups
Things to remember when granting credit:
Formal credit policy, system admin and dedicated disciplined follow up
Aim to achieve all credit advantages
Effective and effeiciant communication
Remain friendly and professional when dealing customers whos accounts are in arreas
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What is the financial function:
The responsibility of timelessly aquiring the needed financial resources under the best condition possible and ensuring the best or optimal use of these resources over the short or long run
Financial activities:
Collecting external information on financial matters
Recording all financial transactions
Financial reporting
Formulating credit policies
Salary administration
Preparing financial budgets
Analyzing financial performance
Safeguarding cash resources
Debt collection
Negotiating with suppliers of capital
The importance of financial management:
to identify if it is a fair selling price to ask and buy
Identify the monthly sale and gross income to keep the business viable
Identify if the forcasted profit will be enough
Identify if it is safer to use own or borrowed capital
Identify the need to optain a loan due to increase in demand
Identify if the business should extent credit sales to clients
Identify the advantages and disadvantages of selling on credit
Identify how we can ensure that goods will be required, bought and paid for by customers
Identify our cash flow management
How important is effective administration for the business to succeed
Responsibilities of financial managers:
Arranging with treasury department
Ensuring that all financial transactions are accounted for
Ensuring that payments and cash received from sales are safeguarded and banked
The Managerial functions within financial Management:
Financial planning:(budgeting, sales forecasting etc.)
Financial leading:(communicating, motivating etc.)
Financial controlling:(Checking and auditing etc.)
Financial Organizing:( Delegation, payments etc.)
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