Issues in Financial Management
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Controllers, corporate treasurers, CFOs and other financial managers should be familiar with these issues in financial management. Many are old concepts, but they often merit revisiting, especially for those new to the field.
Barter Exchanges are a means for cash-poor companies to trade products or services, sometimes at significant implicit discounts from their normal cash prices, thereby supporting their continued operations in difficult times.
Benchmarking is the process of finding relevant points of comparison for financial and other quantitative analyses. To a large extent, Benchmarking is as much an art as a science. Do it incorrectly, and you can promote flawed decision making that is highly costly to the organization. Moreover, clever corporate politicians realize that they can push decisions in their desired direction through a crafty choice of Benchmarks in their analyses.
Some companies have frequent budget exercises as a matter of course, adding to the ongoing level of stress experienced by people in controller positions therein.
Capital Budgets set expenditure levels for long-lived assets that are supposed to generate returns over an extended number of years.
Data security is a major issue of concern in the financial services industry, with huge potential liabilities. Accordingly, it involves not only information technology staff but also risk management and compliance personnel, as well as controllers. Furthermore, financial management professionals in other industries need to be familiar with the issues involved.
Free Credits have long been the financial lifeblood of securities, essentially free money to finance their daily operations.
Invoice Discounting encourages faster payment of bills by customers, reducing accounts receivable. It often is used in tandem with penalties, such as the charging of interest, for late payments.
Also read on to see how cash-rich companies are using the concept of Invoice Discounting in reverse, as a means to extend needed financing to suppliers that cannot obtain bank credit at reasonable rates, or at all.
The Internal Rate of Return, or IRR, is a common metric used in project analysis, to evaluate possible corporate investments.
Junk Bond Finance was popularized in the 1980s as an alternative financing method for companies that were too new or insufficiently profitable to tap the equity markets.
The Lehman Wave
The Lehman Wave describes how small fluctuations in demand or production at one end of a long supply chain can become greatly magnified by the time they reach back to the opposite end of the chain. This set of insights has huge implications for financial managers in a variety of industries.
Matrix reporting is a situation in which an individual has more than one boss. It is a common arrangement for members of financial staff.
Net Present Value, or NPV, is a fundamental tool of financial analysis. Also called Discounted Cash Flow Analysis, it is applied in many different scenarios, from investment analysis to corporate budgeting to project analysis.
Considerations in choosing between, and moving between, Producer and Support job categories.
Also known as Brand Restoration Insurance, Reputation Insurance limits the possible financial damage to a company from adverse publicity.
Royalty Financing ties loan payments to the borrowing firm's earnings. It thus can be a device for a young and growing company to keep debt servicing manageable, by turning it from a fixed to a variable expense.
The Washington Monument Ploy is a common trick employed by managers seeking to avoid reductions to their budgets, one that controllers and CFOs need to vary of.