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I m p r o ve d F in a n cia l

M a n a ge m e n t Fo r SM Es22 October 2012

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CONTENTS

1. What is Financial Management?

2. My experiences of the challenges faced by SMEs

3. Whose responsibility is Financial Management?

4. Jargon Buster

5. How to improve Financial Management?

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WHAT IS FINANCIAL MANAGEMENT?

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Financial Management means p l a n n i n g ,

o r ga n izin g, d ir e c t in g and c o n t r o l l i n g the

utilization of the fir m s r e s o u r ce s .

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MY EXPERIENCE OF FINANCIAL MANAGEMENTINFORMATION IN SMES

1. Entrepreneurs too proud to let on they dont understand the information

2. Accountants are more interested in adding up the numbers than

interpreting the information

3. Financial management information is not user friendly

4. Accountant is not user friendly talking to them is hard work

5. Entrepreneur doesnt have the time to interpret the information

6. Entrepreneur doesnt want to interpret the information/ spoil the dream

they already have enough on their plate

7. N o o n e is u s in g t h e in fo r m a t io n / t h e b u s i n e s s is d r ivin g b lin d

8 . E ve r y m o n t h p r e d ict a b le a n d o ft e n a vo id a b l e ca s h o r p r o fit

s h o r t a g es co m e a s a s u r p r is e

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WHOSE RESPONSIBILITY IS FINANCIALMANAGEMENT?

Your accountants?

Financial management is too important be left to your accountant.

Your financial management information contains the answers to

improving your financial performance survival, annual returns, exit

dreams.

You can delegate the preparation but you should not delegate the

knowledge and understanding.

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DO YOU KNOW

Who are your most and least profitable clients?

What are your most and least profitable products or services?

What value of sales did you generate last month?

What value of profits did you generate last month?

How much cash did you generate last month?

What caused the difference between your profits and your cash

position that month?

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PROFITS AND CASH

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THE DIFFERENCES BETWEEN PROFITS AND CASH

Income statement (P&L): Income less costs = net income (profit)

Cash flow statement: Cash in less cash out = net cash

Why does net income not equal net cash?

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JARGON BUSTER

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JARGON BUSTER

Prepayments

Accruals

Depreciation

Work in Progress

Amortisation

Inventory

M a t c h i n g - ensures the Income statement accurately reflects the results of the business activity for the periodCa s h f lo w s t a t e m e n t - explains the movement in cash in a period

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WHO CAN HELP?

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WHO CAN HELP AND WHERE DO I START?

Entrepreneurs too proud to let on they dont understand the information Accountants more interested in adding up the numbers than interpreting

the information

Financial management information is not user friendly

Accountant is not user friendly talking to them is hard work

Entrepreneur doesnt have the time to interpret the information

Entrepreneur doesnt want to interpret the numbers / spoil the dream

No one has visibility of the information/ business is driving blind

Every month predictable and often avoidable cash or profit shortages

come as a surprise

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WHO CAN HELP AND WHERE DO I START?

Entrepreneurs too proud to let on they dont understand the information Accountants more interested in adding up the numbers than interpreting

the information

Financial management information is not user friendly

Accountant is not user friendly talking to them is hard work

Entrepreneur doesnt have the time to interpret the information

Entrepreneur doesnt want to interpret the information/ spoil the dream

No one has visibility of the information/ business is driving blind

Every month predictable and often avoidable cash or profit shortages

come as a surprise

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INNOVATION AND CAPABILITY VOUCHER (ICV)

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Planning andBudgeting

Cash-flow andWorking Captial

Management

Financial ControlsFinancial

ManagementAdvisory

Financial andBusiness

Assessment forGrowth

All support p l a n n in g, o r ga n izin g, d i r e ct in g and c o n t r o l l i n g

the utilization of the fir m s r e s o u r ce s .

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TAKEAWAYS

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TAKEAWAYS

There a variety of reasons for the poor financial management in SMEs

Financial management is necessary for survival and maximizing returns

You cant delegate financial management to your accountant

There are grants available for us to help you

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Mazars LLP133 Cecil Street#15-02 Keck Seng TowerSingapore 069535

Tel: +65 6224 4022Fax: +65 6225 3974

www.mazars.sg

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