Financial management glossary - Revision history

Designing Buildings at 08:58, 11 December 2020

2020-12-11T08:58:52Z

← Older revision		Revision as of 08:58, 11 December 2020
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	* Current assets - current liabilities = working capital.		* Current assets - current liabilities = working capital.
	* The amount of working capital required can be reduced by accelerating the rate at which money circulates through the business (for example prompt billing).		* The amount of working capital required can be reduced by accelerating the rate at which money circulates through the business (for example prompt billing).
		+
		+	For more information see: Working capital

	= Working capital turnover rate =		= Working capital turnover rate =
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	* Annual statement of income and expenditure that shows if a company has made an overall gain on trading performance.		* Annual statement of income and expenditure that shows if a company has made an overall gain on trading performance.
		+
		+	For more information see:Profit and loss account

	= Balance sheet =		= Balance sheet =

	* A picture of the business as it stands, providing a statement of total assets and liabilities at a given point in time (usually the year end).		* A picture of the business as it stands, providing a statement of total assets and liabilities at a given point in time (usually the year end).
		+
		+	For more information see: Balance sheet

	= Monthly 'flash' profit & loss report =		= Monthly 'flash' profit & loss report =
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	* Sstablish costs for employing the employee / number of working hours = cost rate per hour.		* Sstablish costs for employing the employee / number of working hours = cost rate per hour.
		+
		+	For more information see: Key performance indicators

	= Project resource plan =		= Project resource plan =
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	* Plan for flexibility so there is always some resource available for general work.		* Plan for flexibility so there is always some resource available for general work.
	* It is most efficient to use those with recent experience on similar projects to achieve good results quickly.		* It is most efficient to use those with recent experience on similar projects to achieve good results quickly.
		+
		+	For more information see: Fee forecasting.

	= Cashflow forecasting =		= Cashflow forecasting =

Designing Buildings at 08:53, 11 December 2020

2020-12-11T08:53:24Z

← Older revision		Revision as of 08:53, 11 December 2020
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	# Last resort: Dispute resolution.		# Last resort: Dispute resolution.

−	[[Category:Articles_needing_more_work]] [[Category:~~Definitions~~]] [[Category:DCN_Definition]]	+	[[Category:Articles_needing_more_work]] [[Category:DCN_Collection]] [[Category:DCN_Definition]] [[Category:Definitions]]

Editor: Reverted edits by PaulCooper (talk) to last revision by Designing Buildings

2020-05-05T13:26:51Z

Reverted edits by PaulCooper (talk) to last revision by Designing Buildings

← Older revision		Revision as of 13:26, 5 May 2020
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	* Working capital is the everyday working money available to run the business.		* Working capital is the everyday working money available to run the business.

−	* ~~[https://payrollheaven.com/define/current-asset/~~ Current assets~~] - [https://payrollheaven.com/define/current~~-~~liability/~~ current liabilities] = working capital.	+	* Current assets - current liabilities = working capital.
	* The amount of working capital required can be reduced by accelerating the rate at which money circulates through the business (for example prompt billing).		* The amount of working capital required can be reduced by accelerating the rate at which money circulates through the business (for example prompt billing).

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	= Balance sheet =		= Balance sheet =

−	* A picture of the business as it stands, providing a statement of total assets and liabilities at a given point in time (usually the year-end).	+	* A picture of the business as it stands, providing a statement of total assets and liabilities at a given point in time (usually the year end).

	= Monthly 'flash' profit & loss report =		= Monthly 'flash' profit & loss report =
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	Actual vs budget information based on:		Actual vs budget information based on:

−	* ~~[https://payrollheaven.com/define/net-income/~~ Net Income] (after paying others) (work in progress not included).	+	* Net Income (after paying others) (work in progress not included).
	* Resources.		* Resources.
−	* ~~[https://payrollheaven.com/define/overhead/~~ Overheads].	+	* Overheads.
	* Gives an indication which area might be responsible for a loss or profit.		* Gives an indication which area might be responsible for a loss or profit.
	* Useful over a longer period of time to spot trends and blips.		* Useful over a longer period of time to spot trends and blips.
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	= Key performance indicators (KPI's) =		= Key performance indicators (KPI's) =

−	Profit/ loss based ~~[https://payrollheaven.com/define/key-performance-indicators/~~ KPI]'s:	+	Profit/ loss based KPI's:

−	* Profit per fee earner/partner.	+	* Profit per fee earner / partner.
−	* Turnover per fee earner/partner.	+	* Turnover per fee earner / partner.
−	* Break-even rate.	+	* Break even rate.
	* Overhead rate.		* Overhead rate.

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	Financial Performance plan:		Financial Performance plan:

−	* ~~Establish~~ costs for employing the employee/number of working hours = cost rate per hour.	+	* Sstablish costs for employing the employee / number of working hours = cost rate per hour.

	= Project resource plan =		= Project resource plan =
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	* Cashflow = total money in and out of a business affecting liquidity.		* Cashflow = total money in and out of a business affecting liquidity.
−	* The most accurate way of predicting the financial health of a company in the short-medium term.	+	* The most accurate way of predicting the financial health of a company in the short - medium term.
	* Gives an idea of when cash shortage problems may be approaching.		* Gives an idea of when cash shortage problems may be approaching.
	* Rolling 6 monthly.		* Rolling 6 monthly.
−	* If seeking a loan/overdraft, a 2/3 year forecast may be needed.	+	* If seeking a loan / overdraft, a 2/3 year forecast may be needed.

	Inflows:		Inflows:
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	Outflows:		Outflows:

−	* ~~[https://payrollheaven.com/define/payroll/~~ Payroll].	+	* Payroll.
	* PAYE/ NI.		* PAYE/ NI.
−	* ~~[https://payrollheaven.com/define/rent/~~ Rent].	+	* Rent.
	* PII.		* PII.
	* Office supplies.		* Office supplies.
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	* Invoice for fees in a regular and determined way.		* Invoice for fees in a regular and determined way.
	* Chase up when they are not paid on time.		* Chase up when they are not paid on time.
−	* Agree on payment terms.	+	* Agree payment terms.
	* Keep a record of all correspondence regarding fees.		* Keep a record of all correspondence regarding fees.

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	# Remind them of agreed terms in invoices.		# Remind them of agreed terms in invoices.
−	# If ~~overdue~~ send a reminder email with a copy of invoice.	+	# If over due send reminder email with copy of invoice.
	# Further 1 or 2 weeks… phone call.		# Further 1 or 2 weeks… phone call.
−	# Last resort: ~~[https://payrollheaven.com/define/alternative-dispute-resolution/~~ Dispute resolution].	+	# Last resort: Dispute resolution.

−	[[Category:Definitions]]	+	[[Category:Articles_needing_more_work]] [[Category:Definitions]] [[Category:DCN_Definition]]

PaulCooper at 10:02, 5 May 2020

2020-05-05T10:02:24Z

← Older revision		Revision as of 10:02, 5 May 2020
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	* Working capital is the everyday working money available to run the business.		* Working capital is the everyday working money available to run the business.

−	* [https://payrollheaven.com/define/current-asset/ Current assets] - [https://payrollheaven.com/define/current-liability/ current liabilities] = ~~[https://payrollheaven.com/define/~~working-capital~~/ working capital]~~.	+	* [https://payrollheaven.com/define/current-asset/ Current assets] - [https://payrollheaven.com/define/current-liability/ current liabilities] = working capital.
	* The amount of working capital required can be reduced by accelerating the rate at which money circulates through the business (for example prompt billing).		* The amount of working capital required can be reduced by accelerating the rate at which money circulates through the business (for example prompt billing).

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	Actual vs budget information based on:		Actual vs budget information based on:

−	* Net Income (after paying others) (work in progress not included).	+	* [https://payrollheaven.com/define/net-income/ Net Income] (after paying others) (work in progress not included).
	* Resources.		* Resources.
	* [https://payrollheaven.com/define/overhead/ Overheads].		* [https://payrollheaven.com/define/overhead/ Overheads].
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	Outflows:		Outflows:

−	* [https://payrollheaven.com Payroll].	+	* [https://payrollheaven.com/define/payroll/ Payroll].
	* PAYE/ NI.		* PAYE/ NI.
	* [https://payrollheaven.com/define/rent/ Rent].		* [https://payrollheaven.com/define/rent/ Rent].
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	# If overdue send a reminder email with a copy of invoice.		# If overdue send a reminder email with a copy of invoice.
	# Further 1 or 2 weeks… phone call.		# Further 1 or 2 weeks… phone call.
−	# Last resort: Dispute resolution.	+	# Last resort: [https://payrollheaven.com/define/alternative-dispute-resolution/ Dispute resolution].

	[[Category:Definitions]]		[[Category:Definitions]]

PaulCooper at 09:55, 5 May 2020

2020-05-05T09:55:13Z

← Older revision		Revision as of 09:55, 5 May 2020
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	* Working capital is the everyday working money available to run the business.		* Working capital is the everyday working money available to run the business.

−	* Current assets - current liabilities = working capital.	+	* [https://payrollheaven.com/define/current-asset/ Current assets] - [https://payrollheaven.com/define/current-liability/ current liabilities] = [https://payrollheaven.com/define/working-capital/ working capital].
	* The amount of working capital required can be reduced by accelerating the rate at which money circulates through the business (for example prompt billing).		* The amount of working capital required can be reduced by accelerating the rate at which money circulates through the business (for example prompt billing).

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	= Balance sheet =		= Balance sheet =

−	* A picture of the business as it stands, providing a statement of total assets and liabilities at a given point in time (usually the year end).	+	* A picture of the business as it stands, providing a statement of total assets and liabilities at a given point in time (usually the year-end).

	= Monthly 'flash' profit & loss report =		= Monthly 'flash' profit & loss report =
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	* Net Income (after paying others) (work in progress not included).		* Net Income (after paying others) (work in progress not included).
	* Resources.		* Resources.
−	* Overheads.	+	* [https://payrollheaven.com/define/overhead/ Overheads].
	* Gives an indication which area might be responsible for a loss or profit.		* Gives an indication which area might be responsible for a loss or profit.
	* Useful over a longer period of time to spot trends and blips.		* Useful over a longer period of time to spot trends and blips.
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	= Key performance indicators (KPI's) =		= Key performance indicators (KPI's) =

−	Profit/ loss based KPI's:	+	Profit/ loss based [https://payrollheaven.com/define/key-performance-indicators/ KPI]'s:

−	* Profit per fee earner / partner.	+	* Profit per fee earner/partner.
−	* Turnover per fee earner / partner.	+	* Turnover per fee earner/partner.
−	* Break even rate.	+	* Break-even rate.
	* Overhead rate.		* Overhead rate.

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	Financial Performance plan:		Financial Performance plan:

−	* ~~Sstablish~~ costs for employing the employee / number of working hours = cost rate per hour.	+	* Establish costs for employing the employee/number of working hours = cost rate per hour.

	= Project resource plan =		= Project resource plan =
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	* Cashflow = total money in and out of a business affecting liquidity.		* Cashflow = total money in and out of a business affecting liquidity.
−	* The most accurate way of predicting the financial health of a company in the short - medium term.	+	* The most accurate way of predicting the financial health of a company in the short-medium term.
	* Gives an idea of when cash shortage problems may be approaching.		* Gives an idea of when cash shortage problems may be approaching.
	* Rolling 6 monthly.		* Rolling 6 monthly.
−	* If seeking a loan / overdraft, a 2/3 year forecast may be needed.	+	* If seeking a loan/overdraft, a 2/3 year forecast may be needed.

	Inflows:		Inflows:
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	Outflows:		Outflows:

−	* Payroll.	+	* [https://payrollheaven.com Payroll].
	* PAYE/ NI.		* PAYE/ NI.
−	* Rent.	+	* [https://payrollheaven.com/define/rent/ Rent].
	* PII.		* PII.
	* Office supplies.		* Office supplies.
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	* Invoice for fees in a regular and determined way.		* Invoice for fees in a regular and determined way.
	* Chase up when they are not paid on time.		* Chase up when they are not paid on time.
−	* Agree payment terms.	+	* Agree on payment terms.
	* Keep a record of all correspondence regarding fees.		* Keep a record of all correspondence regarding fees.

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	# Remind them of agreed terms in invoices.		# Remind them of agreed terms in invoices.
−	# If ~~over due~~ send reminder email with copy of invoice.	+	# If overdue send a reminder email with a copy of invoice.
	# Further 1 or 2 weeks… phone call.		# Further 1 or 2 weeks… phone call.
	# Last resort: Dispute resolution.		# Last resort: Dispute resolution.

−	~~[[Category:Articles_needing_more_work]]~~ [[Category:Definitions]]	+	[[Category:Definitions]]

Designing Buildings at 07:55, 17 November 2019

2019-11-17T07:55:08Z

← Older revision		Revision as of 07:55, 17 November 2019
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	# Last resort: Dispute resolution.		# Last resort: Dispute resolution.

−	[[Category:Articles_needing_more_work]]	+	[[Category:Articles_needing_more_work]] [[Category:Definitions]]

Designing Buildings: moved Financial Management to Financial management glossary

2016-05-17T10:18:18Z

moved Financial Management to Financial management glossary

← Older revision

Revision as of 10:18, 17 May 2016

Designing Buildings at 10:17, 17 May 2016

2016-05-17T10:17:53Z

← Older revision		Revision as of 10:17, 17 May 2016
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	Fee forecasting is crucial to running a business as it allows the future financial position to be assessed and ensures that records of potential fees are maintained.		Fee forecasting is crucial to running a business as it allows the future financial position to be assessed and ensures that records of potential fees are maintained.

−	== Captive fee forecasting ==	+	Captive fee forecasting:

	* Fees are agreed, fully documented, contractually binding and scheduled for current projects.		* Fees are agreed, fully documented, contractually binding and scheduled for current projects.
−	* ~~Best~~ indicator of how busy ~~practice~~ is likely to be in short to medium term.	+	* An indicator of how busy a company is likely to be in short to medium term.
−	* Avoid cliff edge - when project is delivered fees reduce so important to win more work to maintain cash-flow through fees.	+	* Avoid the cliff edge - when a project is delivered fees reduce so it is important to win more work to maintain cash-flow through fees.

−	== Future possible fee forecasting ==	+	Future possible fee forecasting:

−	* All possible fees hoped to be ~~earn~~. Anything but certain.	+	* All possible fees hoped to be earned. Anything but certain.
−	* Quantify probability of winning them. success probability factor %	+	* Quantify probability of winning them with a success probability factor %.
−	* The aim is to attempt to predict the medium to long term	+	* The aim is to attempt to predict the medium to long term.

−	== Resources forecast ==	+	Resources forecast:

−	* Establish if right number of people available ~~to be able~~ to deliver the work lined up in the captive fees forecast.	+	* Establish whether the right number of people are available to deliver the work lined up in the captive fees forecast.
−	* rolling weekly forecast of people required vs people available	+	* Keep a rolling weekly forecast of people required vs people available.
−	* Plan for flexibility so always some resource available for general ~~marketing such as submission of new~~ work~~/competitions/webstie etc..~~.	+	* Plan for flexibility so there is always some resource available for general work.
−	* ~~Efficient~~ to use those with ~~most~~ recent experience on similar projects to achieve good results quickly.	+	* It is most efficient to use those with recent experience on similar projects to achieve good results quickly.

	= Cashflow forecasting =		= Cashflow forecasting =

−	* Cashflow = total money ~~IN & OUT~~ of business affecting liquidity.	+	* Cashflow = total money in and out of a business affecting liquidity.
−	* ~~Most~~ accurate way of predicting the financial health of ~~practice~~ in short - medium term.	+	* The most accurate way of predicting the financial health of a company in the short - medium term.
−	* ~~Idea~~ of when cash shortage ~~problem~~ may be approaching.	+	* Gives an idea of when cash shortage problems may be approaching.
−	* Rolling 6 monthly	+	* Rolling 6 monthly.
−	* If seeking loan/ overdraft~~: may need up to~~ 2/3 year forecast.	+	* If seeking a loan / overdraft, a 2/3 year forecast may be needed.

−	Inflows	+	Inflows:

−	* Fees	+	* Fees.
−	* VAT ~~colleciton~~	+	* VAT collection.
−	* Opening balance	+	* Opening balance.

−	Outflows	+	Outflows:

−	* Payroll	+	* Payroll.
−	* PAYE/ NI	+	* PAYE/ NI.
−	* Rent	+	* Rent.
−	* PII	+	* PII.
−	* Office ~~supplies…~~	+	* Office supplies.

	= Credit Control =		= Credit Control =

−	* Good organisation is key to good credit control	+	* Good organisation is the key to good credit control.
−	* Invoice for fees in regular ~~&~~ determined way	+	* Invoice for fees in a regular and determined way.
−	* Chase up when not paid on time	+	* Chase up when they are not paid on time.
−	* ~~RIBA standard forms of agreement have~~ payment terms ~~written in~~.	+	* Agree payment terms.
−	* Keep record of all correspondence regarding ~~fee - efficient to deal with fee related disputes~~	+	* Keep a record of all correspondence regarding fees.

−	== Late ~~Payments ==~~	+	Late payments:

	* Logged in aged debtor report - all outstanding payments and for how long.		* Logged in aged debtor report - all outstanding payments and for how long.
−	* Understand clients payment systems ~~- could have a monthly payment policy so work with their accountants to understand~~.	+	* Understand clients payment systems.
		+	* Outstanding invoices should be chased

−	~~Outstanding invoices should be chased~~	+	# Remind them of agreed terms in invoices.
−		+	# If over due send reminder email with copy of invoice.
−	# ~~remind~~ them of agreed terms in invoices.	+
−	# If over due send reminder email with copy of invoice	+
	# Further 1 or 2 weeks… phone call.		# Further 1 or 2 weeks… phone call.
−		+	# Last resort: Dispute resolution.
−	~~Multiplier affect~~	+
−		+
−	~~Full amount deducted from profit/loss report as expense.~~	+
−		+
−	== Last ~~Resort ==~~	+
−		+
−	Dispute resolution ~~methods within signed agreement~~.	+

	[[Category:Articles_needing_more_work]]		[[Category:Articles_needing_more_work]]

Designing Buildings at 10:11, 17 May 2016

2016-05-17T10:11:26Z

← Older revision		Revision as of 10:11, 17 May 2016
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−	== Working ~~Capital =~~=	+	= Working capital =

−	* ~~Everyday~~ working money to run the business.	+	* Working capital is the everyday working money available to run the business.

−	* Current assets - current liabilities = ~~Working Capital~~	+	* Current assets - current liabilities = working capital.
−	* WC required can be reduced by accelerating rate money circulates through ~~the business.~~	+	* The amount of working capital required can be reduced by accelerating the rate at which money circulates through the business (for example prompt billing).
−	* Amount can be reduced by accelerating the rate money circulates the business (~~bill promptly!~~)	+

−	== Working capital turnover rate ==	+	= Working capital turnover rate =

−	* Total annual fee income / average value working capital = ~~Working~~ capital turnover rate	+	* Total annual fee income / average value working capital = working capital turnover rate.

−	== Profit and loss account ==	+	= Profit and loss account =

−	* Annual statement of income and expenditure that shows if a ~~practice~~ has made an overall gain on trading performance.	+	* Annual statement of income and expenditure that shows if a company has made an overall gain on trading performance.

−	== Balance ~~sheets =~~=	+	= Balance sheet =

−	* ~~Picture~~ of business as it stands	+	* A picture of the business as it stands, providing a statement of total assets and liabilities at a given point in time (usually the year end).
−	* Statement of total assets and liabilities at a given point in time (usually year end)	+

−	== Monthly 'flash' profit & loss report ==	+	= Monthly 'flash' profit & loss report =

−	Actual vs budget based on:	+	Actual vs budget information based on:

−	* Net Income (after paying ~~sub consultants~~) (~~WIP~~ not included)	+	* Net Income (after paying others) (work in progress not included).
−	* Resources	+	* Resources.
−	* Overheads	+	* Overheads.
−	* ~~Allows to see~~ which area might be ~~to blame~~ for loss or profit.	+	* Gives an indication which area might be responsible for a loss or profit.
	* Useful over a longer period of time to spot trends and blips.		* Useful over a longer period of time to spot trends and blips.

		+	= Key performance indicators (KPI's) =

		+	Profit/ loss based KPI's:

−	~~= KPI's =~~	+	* Profit per fee earner / partner.
		+	* Turnover per fee earner / partner.
		+	* Break even rate.
		+	* Overhead rate.

−	~~== Profit/ loss based~~ KPI's ==	+	Liquidity KPI's (liquid assets=cash):

−	* ~~Profit per fee earner / partner~~	+	* Analyses ability to pay bills as they become due.
−	* ~~Turnover per fee earner~~ / ~~partner~~	+	* Current ratio = current assets (including work in progress) / current liabilities.
−	* Break even rate	+
−	* Overhead rate	+

−	~~== Liquidity KPI's~~ (~~liquid~~ assets=cash) ==	+	* Quick ratio (acid test) - quick assets (cash+bank balance+debts) / current liabilities'
		+	* Ratios over 1 are deemed satisfactory. The higher the better.

−	~~Analyses ability to pay bills as they become due~~	+	Financial Performance plan:

−	* ~~Current Ratio = Current Assets (inc WIP)~~/~~Current Liabilities~~	+	* Sstablish costs for employing the employee / number of working hours = cost rate per hour.

−	* Quick ratio (Acid test) - Quick assets (cash+bank balance+debts)/current liabilities	+	= Project resource plan =
−		+
−	~~Ratios over 1 are deemed satisfactory. Higher the better.~~	+
−		+
−	=~~= Financial Performance~~ plan ==	+
−		+
−	* establish costs for employing the employee / number of working hours = cost rate per hour	+
−		+
−	~~= Project Resource Plan~~ =	+

	* Shows hours of each grade of person required monthly.		* Shows hours of each grade of person required monthly.
−	* Hours translated into cost by x by rate per hour of each grade.	+	* Hours translated into cost x by rate per hour of each grade.
−	* ~~projected~~ fees vs projected cost ~~better~~ plotted on graph	+	* Projected fees vs projected cost - plotted on graph.
−	* ~~compare~~ projected with actual to monitor performance	+	* Compare projected with actual to monitor performance.
−	* ~~share info with team~~ to give sense of involvement + responsibility. will allow them to align actions with best ~~interest~~ of ~~project~~.	+	* Share information to give a sense of involvement and responsibility. This will allow them to align their actions with the best interests of the company.

	= Fee forecasting =		= Fee forecasting =

−	Fee forecasting is crucial to running a business as it allows the future financial position to be assessed and it ensures that records ~~are maintained~~ of potential fees.	+	Fee forecasting is crucial to running a business as it allows the future financial position to be assessed and ensures that records of potential fees are maintained.

	== Captive fee forecasting ==		== Captive fee forecasting ==

G1001 at 13:59, 8 May 2016

2016-05-08T13:59:31Z

Show changes