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■ EMPOWERMENT TRAINING WORKSHOPS
ON MODERN AGROPRENURIAL processing SECTOR.

● Concept of Financial Management.
● Objectives of Financial Management.
● Sound bookkeeping , Budget, Cash Flow etc.

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CONCEPT OF FINANCIAL MANAGEMENT.
Business finance can be broadly defined as the activities concerned with the planning, raising, controlling and administratering the funds used in business. This definition is concerned with financial management of profit – seeking business organisations engaged in all types of activities.

INTRODUCTION
• Finance plays a significant role in the operations of any purposefull organisations.
• Proper planning and control of business finance leads to efficient utilisation of resources.
• Financial decisions also alter the size and variablity of the earnings stream or profitability.
•The value of the firm is determined by financial policy decision , sich as risk and profitability.
• The assignment of financial management is to strike a harmony among hazards and productivity by contributing the most astounding long haul an incentive to the protection of the fitm.
• Financial management , subsequently plays out pivotal role in the survival and achievement of business undertakings.
• Financing is the basic management work which gives the methods for curing shortcomings in different zones.
• Financing thus is an integral part of managerial functions and responsibilities affecting an organisation’s performance.
• Financial management includes bookkeeping, projections, financial statements and financing which formd the foundation for reaching your goals through sound business decisions.
• Financial management is one of the main avenue to success as a business owner.
• Financial management is the way you know if you are making profit .it helps to decide what you can afford in terms of store or office location, inventory purchases, employees and equipment.
• You need sound financial information to set your prices and select your vendors.
• Financial mgt gives you the tools to plan for overall business growth gor diversification og your product line or reaching new markets.
• Financial management helps you decide which products , services and markets are profitable.
• Effective financial management gives you tools to chart your course into the future adjust your decision when needed and help you find your way through challenging times.
If your business growth requires financing ( loans ), Fin.mgt provides the information to know how much you can afford for your business.
• Financial management gives you the documentation needed for a loan application but also helps discuss your business circumstances with a lender in terms that improve your ability qualify for loan.
• The importance of Fin.mgt is thus universally recognised in business undertakings.
Industrial development is a legitimate objective to solve the economic and social problems present in any country. It assumes a critical job in the end of the financial backwardness of the rustic and immature areas of the nation in the achievement of confidence and in the decrease of territorial uneven characters.
• Effective fin.mgt is basic to the survival and accomplishment of each business endeavours.
• Tragically, numerous small scale proprietors have moderatly restricted introduction to fin.mgt and have been uninformed of how deliberately significant it is to their business execution.
• Wasteful financial mgt harms business productivity and constantly influences the development of Small sScale Enterprises
• Better monetary administration can lead the venture ahead in rivalry just as it will assist the business person with avoiding the circumstances of industrial disorder.

 OBJECTIVES  OF FINANCIAL MANAGEMENT.

Financial management decides how assets are secured and utilised . They identify with a company’s financing anf speculation strategies. To settle on unavoidable and constant budgetary choices as method of reasoning , the firm should have a goal.
The properly defined and understood objectives are the key, to successfully moving from the firm’s present position to a future desired position.
Since business firms are profit making organisations, their objectives are frequently expressed in terms of money. Two essential targets ordinarily experienced are amplification of benefits and augmentation of riches
The last is an operationally legitimate standard to be received to boost the welfare of proprietors.

SOUND BOOKKEEPING IS THE BASIS FOR ALL FINANCIAL MANAGEMENT.
Bookkeeping is the organised process of tracking all income and expense transactions.
Bookkeeping is a critical component .of financial management , which leads to better business decisions regarding taxes, owner’s draw and retirement. Here are eleven basic bookkeeping steps:
—- Obtain business accounting software . Proper software selection is critical fot success (or manual at initial stage ).
—- Open a separate business bank account . Do not mix business and personal checking accounts.
—- Reconcile your bank account (bank reconciliation ), Each month , reconcile your account using business accounting software or cloud computing reconciliation process. (or manually).
—Track sales . Create an airtight system for tracking sales using tools such as a register tape, invoices and a sales book. Always use this sales tracking system. Fin.mgt for a Small Business Participant Guide.
— Deposit all sales using the duplicating deposit slips, deposit all sales in your business bank account.
Alternatively “remote deposit capture” (on line or transfer) may be available for depositing — this technology allows you to deposit into your account from your office by sending the bank an electronic image of the check . Total sales should equal total deposits. Don’t spend cash sales. Link all forms of sales documentation ( such as invoices, cash register tapes and sales books ) with a specific deposit.
—- Write business cheque for all business expenses. Don’t use a petty cash system until you are experienced at bookkeeping.
—- Obtain a separate business credit or debit card. If you plan to use a card for business expenses, consider obtaining a card in your company’s name . Doing so will help you keep track business expenses.
—- Pay business expenses first. Most businesses start out as a sole proprietorship . In sole proprietorships , you , the owner , do not get a salary , rather you take an owner’s drawing. A common question is how much drawing to take.?
Here is a rule of thumb; Sales pay for business expenses first . Personal expenses second (step 10 below).
—- Run a profit and loss ( P&L )statement.A bank account balance is not a good indication of how much profit the business has made or what amount is available for owner ‘s draw. A P&L statement can provide a better picture of the financial health of the organisation.
—- Pay yourself with owner’s drawing. Owners should pay themselves by writing a cheque or making an electronic transfer from business account to a personal account. If you are a sole proprietor , assign those drawing account called ” Drawings”.

BUDGET
Creating a budget is the first place to start with your financial management practice. A budget is a list of all your ( monthly or yearly ) expenses, organised by categories . A budget is a tool that helps you:

Track all your business expenses.
Plan for the future.
Economize when you need to.
Plan for expansion.
Make a profit.
Once you create a budget, use it to compare what you’ve budgeted with your actual expenditures.

CASH FLOW
Cash flow can be defined in two ways:
》 Balance of cash received less the amount of cash paid out over a period of time.
》 Moving cash in or out of a business.

Cash Flow Projection
A cash flow projection id a financial statements that tries to show how cash expected to floe in and out of business over a future period of tome.

A cash flow projection i used to see if projected cash receipts (in flows) will be sufficient to cover projected cash disbursements (out flows )

A business can be profitable and still rin out of cash.

A s an investment banker might say ” Cash flow provide the visibility needed to avoid liquidity problems .” In order words , a cash flow projection is a tool.to help you manage your cash so you can pay your bills on a timely basis and keep the door of your business open.

A cash flow projection is a great tool fot setting sales goals and planning for expenses to support those sales.

A related use of a projection is to determine your breakeven point during a start-up or expansion phase . If you need to plan for a large expenditure, such as an equipment purchase or move to a new location , a cash flow projection is a perfect tool.

Similarly, if you have a seasonal business with large inventory purchases, a projection can help you have the cash on hand to make large inventory investment when you need it.

A P & L statement can mask cash shortages if you use accrual accounting. A cash flow projection helps you see the cash status of your business now and plan into the future. A cash flow projection is a good way to prepare and plan for your financing needs and is often a required part of a business loans application.

CASH FLOW PROJECTION.
》 The first set of rows, titled Sources of Cash.

Document all sources of incoming cash, including cash from customers sales , interest earned, loan funds and current checking and savings account balances.

Sources of Cash
● Cash sales
● Collections on A/R
● Interest income
● Loan Received
● Equity Contributions

Total Cash Available
■ The second section , Operating Uses of Cash.

Contains all those expenditures associated with the day – to – day buying and selling process. Most of these expenses show up on P & L statement.
● Contract Labour
● Wages
● Payroll Taxes
● Rent
●Phone
●Office Supplies
● Utilities
● Insurance
● Marketing
● Professional Fees.

The third section, Non -Operating
Uses of Cash, show expenses that normally show up on your Balance Sheet : equipment purchases , the principle portion of loan payments, inventory, , Taxes and Ower’s draw. Subtract your uses of Cash from your total Cash Available and you have Ending Cash for the month. Which becomes Opening Cash for the next month.
●Debt Service
● Capital Purchases
● Self -Employment Taxes.
● Owner’s Draw
● Inventory Purchases.

PROFIT AND LOSS STATEMENT

Functions of Financial Management.

The financial management function is not a standard operation. The functions vary from firm to firm depending upon the size of the company, nature of industry and tradition. In small units the proprietor for the most part handles all issues including the obtainment and use of assets while in the medium estimated organisation monetary official might be worried about the budgetary administration. In a major venture essential significance is given to the money related directors to take choice on different capacities, for example, profit strategy , renegotiating of development , presentation of another item , dealing with the association’s working capital .Hence, the functions of financial management vary from firm to firm depending upon circumstances.

Generally, the investigation of business finance is fixated on either the management of the company’s present resources; money, debt claims and inventories or the company’s procurement of assets. Be that as it may, in the cutting edge approach, account capacity involves a key position in the company’s general management and assumes a note worthy job in arranging and estimatimg the association’s requirement for assets in raising the vital assets and afterwards putting the assets procured to viable use . Hence, measuring, acquiring and using of funds are the three basic functions og finance.

FIVE KEY POINTS TO REMEMBER
■ Financing is getting the money you need to start , operate or grow your business . Before borrowing money for your business , develop a business plan to help determine whether your business can afford a loan. If you need to borrow money , take time to compare – shop for the best loan options.
■ Start financial management with a budget.
■ Sound bookkeeping is the basis for all financial management
■ Cash flow projection will help you to see cash shortages even when accrual accounting may mask these shortages.
■ A Profit & Loss (P&L) statement is the best tool for knowing if your business is profitable. Financial Management for a Small Business Participant Guide..

STATEMENT OF THE PROBLEM.
— Lack of demand and shortage of working capital have been the main reason for acute and incipient sickness in both the registered and unregistered units in Small Scale Enterprises sector.
—- Every kind of problem , whether of raw material, power, transport, labour or marketing, faced by an entrepreneur in it’s ultimate analysis turns out to be a problem of finance.
— Finance is the backbone of every business enterprise . It has to be managed effectively so that there arise on waste of physical and financial resources . It has been a critical success factor for the organisation.
—- The Small Scale Enterprises have a restricted source of finance. Input and technology . So they have to be more careful in utilising them. All the entrepreneurs have the main objective of maximising growth. The focus has been on the increase of profitability, turnover and long term growth.
Sometimes, this has been achieved at the expense of short term profitability on the return on the capital. This situation may not be necessarily due to lack of capital or finance, but due to poor management of funds.
—– Lack of financial management has been limiting the growth of any enterprise; at the same time , utilisation of funds got affected the use of all the other resources. Any type of entrepreneurial activitiy concerned with production , marketing, personnel and the ultimate revolves around the availability of financial resources.
—- Financialh Managementhas been the key factor which determines a business will be successful in.the long run. In the case of Small Scale Enterprises, gaining profit got affected by a number of factors, like: innovative productivity, credit availability , market for their products, Skill labours and prudent financial management.
Out of the above factors, management of finance has been very important as this affects the day to do the running of the firm. Therefore , along with profitability, liquidity is also very important for any enterprise.

●The twin factors of profitability and liquidity can be achieved if a firm has got good financial management practices.

MICRO SMALL AND MEDIUM ENTERPRISES IN GLOBAL PERSPECTIVE.
Countries over the globe don’t utilize a similar definition for grouping their Small and Medium Enterprises (SME) and area nor complete an all – inclusive definition give off an impression of being vital. The definitions being used rely upon the reasons for which they have been implied , and has required to serve the strategies that oversee the SME part in this way characterized. Real parameters for the most part had been connected by most nations , independently or in mix. , in characterizing SME area include.
》Capital investment in plant machinery:
》 Number of workers employed
》 Volume of production or turnover of business.

Micro, Small and Medium Enterprises have also been referred to as SMEs and Small and Medium – sized Businesses (SMB) in some countries.

The SME occurs commonly in the European Union and in international organisations such as the World Bank , the United Nations and World Trade Organisation. The term Small and Medium sized Businesses or SMBs had been predominantly used in the USA .
In the European Union /USA SMBs are companies whose headcount or turnover falls below certain limits. The business has classified as per the number of employees employed in it.

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