Effective Financial Management (sunday Times Creating Success)

Effective Financial Management Effective Financial Management Brian Finch Publisher’s note Every possible effort has been made to ensure that the information contained in this book is accurate at the time of going to press, and the publishers and authors cannot accept responsibility for any errors or omissions, however caused. No responsibility for loss or damage occasioned to any person acting, or refraining from action, as a result of the material in this publication can be accepted by the editor, the publisher or any of the authors. First published in Great Britain and the United States in 2010 by Kogan Page Limited Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance with the terms and licences issued by the CLA. Enquiries concerning reproduction outside these terms should be sent to the publishers at the undermentioned addresses: 120 Pentonville Road 525 South 4th Street, #241 London n1 9jn Philadelphia pa 19147 United Kingdom usa www.koganpage.com 4737/23 Ansari Road Daryaganj New Delhi 110002 India © Brian Finch, 2010 The right of Brian Finch to be identified as the author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988. ISBN 978 0 7494 5878 2 E-ISBN 978 0 7494 5916 1 The views expressed in this book are those of the author, and are not necessarily the same as those of Times Newspapers Ltd. British Library Cataloguing-in-Publication Data A CIP record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Finch, Brian.    Effective financial management / Briain Finch.      p. cm.    ISBN 978-0-7494-5878-2 -- ISBN 978-0-7494-5916-1 (ebook) 1. Business enterprise--Finance. I. Title.    HG4026.F518 2010    658.15--dc22 2009036752 Typeset by Jean Cussons Typesetting, Diss, Norfolk Printed and bound in India by Replika Press Pvt Ltd Contents Introduction  1 1 The business plan  3 Trading results 5; The business strategy in your business plan 11; Risks, contingencies and scenarios 17 2 Assessing projects  23 Discounted cash flow 25; Other evaluation methods 28; Postscript 30; Business acquisitions 31 3 The budget process  35 Review your planning team 3; Revise your business plan 4; What is a budget and why does a business need one? 35; Explicit assumptions 36; Start with sales 37; Work up the costs 38; The balance sheet and cash flow 38; Reviewing the budget 41; Wishful thinking 42 4 Cash  45 Manage cash 46; Debt recovery 46; Manage problem accounts 51; Cash forecasting 59; Releasing cash 6