Small business financial management

BSBSMB406 Manage small business finances

This unit is about implementing and regularly reviewing financial management strategies. It applies to individuals who operate a small business that stands alone, or is part of a department within a larger organization. Individuals in this role interpret financial reports and other numerical data to develop financial management strategies.

How you will be assessed

You will be assessed through:

Specific documents Submit a fully researched financial plan according to the requirements below it needs to include a balance sheet and a profit and loss statement. Your assessor might also ask for cash flow statement.

 

Practical

You will be assessed in the workplace as a safe environment. You will need to demonstrate consistent performance of typical activities as a samll business manager, and will need access to:

  1. business equipment and resources.
  2. relevant legislation, regulations, standards and codes.
  3. relevant workplace documentation and resources.
  4. case studies or where possible, real situations.
  5. interaction with others.

You will need to show that you can operate the business according to the business plan, including:

  1. Adhering to legal requirements.
  2. Meeting requirements of financial backers.
  3. Defining strategies for debt collection and contingencies for debtors.
  4. Managing cash flow.
  5. Defining key performance indicators.
  6. Communicating with relevant people.
  7. Monitor the business against financial plan and make changes as required.

 

Assignment/interview questions

  1. What is benchmarking?
  2. Explain the cactors in making financial decisions in your business.
  3. Explain your financial indicators (goals, business ratios).
  4. Why were those financial indicators selected as significant and realistic?
  5. What are the purposes of financial reports?
  6. Explain the steps in preparing a budget/actual reports.
  7. Explain how to interpret budget/actual reports. (Include the role of any short-term or annual cycles.)
  8. Explain the steps in preparing a balance sheet.
  9. Explain how to interpret a balance sheet.
  10. Outline debt collection procedures or strategies.
  11. Explain the steps in preparing a preparing profit and loss statement.
  12. Explain how to interpret a profit and loss statement.
  13. Explain the role of stock records and stock control in your business.

Note: Your assessor may also ask you a variety of what if questions.

 

Detailed requirements

1. Implement a financial plan.

  1. Identify financial information requirements and get specialist services, as required, to profitably operate the business according to the business plan.
  2. Produce financial budgets or projections, including cash flow estimates, as required for each forward period, and distribute to relevant people according to legal requirements.
  3. Negotiate, secure and manage business capital to implement the business plan as effectively as possible and to meet requirements of financial backers.
  4. Develop and maintain strategies to make sure you have enough financial provision for taxation according to legal requirements.
  5. Develop, monitor and maintain client credit policies, including contingencies for debtors in default, to maximize cash flow.
  6. Select KPIs so that you can do ongoing monitoring of financial performance.
  7. Record and communicate financial procedures to relevant people so that you can implement the business plan.

2. Monitor financial performance.

  1. Regularly monitor and report on financial performance targets, and analyze data to establish the extent to which the financial plan has been met.
  2. Monitor marketing and operational strategies for their effects on the financial plan.
  3. Calculate and evaluate financial ratios according to your own or industry benchmarks.
  4. Assess the financial plan to determine whether you need to make variations or alternative plans, and make any necessary changes.