UNIT - 4

MANAGING FINANCE
 OBJECTIVES OF MANAGING FINANCE FOR ENTREPRENEUR

• TO REMOVE UNCERTAINITIES
• TO ELIMINATE WASTAGE
• SERVES AS A GUIDE TO ACHIEVE OBJECTIVES
• ENSURE AVAILABILITY OF ADEQUATE FUNDS AT ALL TIMES
• TO MAINTAIN BALANCE BETWEEN PROFITABILITY AND LIQUIDITY
• TO MAKE SURE THERE IS MINIMUM COST
• TO PREDICT FUTURE REQUIREMENTS
 STEPS IN PREPARING AN OPERATING BUDGET

• PREPARE SALES BUDGET

• PREPARE COST/EXPENSE BUDGET
• PROPER ATTENTION TO FINANCES
• PREPARE THE OPERATING BUDGET

SIGNIFINACE OF OPERATING BUDGET

• HELPS IN TRACKING INCOME AND EXPENSES

• IMPROVES OVERALL EFFICIENCY
• GUIDANCE FOR EFFICIENT PLANNING
• ALLOWS TO MAKE RIGHT INVESTMENTS
• HELPS IN PREPARING FOR FINANCIAL OBLIGATIONS
TYPES OF OPERATING BUDGETS
 A cash budget is an estimation of the cash flows of a business over a specific period of time. This could be for a
weekly, monthly, quarterly, or annual budget. This budget is used to assess whether the entity has
sufficient cash to continue operating over the given time frame.

Parts of cash budget

 OBJECTIVES OF CASH BUDGET

• Project firm’s cash position in future

• Predict cash surplus or deficit in future
• Permit proper utilization of idle cash
• Exercise control over cash expenditure
• Allow planning of financing if needed
• Help in selection of source of funds

SIGNIFICANCE OF CASH BUDGET

• Important tool for planning fund requirements and controlling cash position
• Helps in determining which months may have surplus and which may have deficit and by how much
• Indicates the best time to undertake financing process
• Cash budget is conducive to formulation of dividend policy
• Can compare actual receipts and expenditures with the estimated figures
• Finance manager can maintain high liquidity
 SHORT TERM CAPITAL

Short term finance refers to financing needs for a small period

normally less than a year. In businesses, it is also known as 
working capital financing. This type of financing is normally needed
because of uneven flow of cash into the business, the seasonal
pattern of business, etc. In most cases, it is used to finance all types
of inventory, accounts receivables etc.

SOURCES OF SHORT TERM CAPITAL

 SOURCES OF LONG TERM FINANCE

• EQUITY SHARES
• PREFERENCE SHARES
• BONDS & DEBENTURES
• RETAINED EARNINGS
• LONG TERM LOANS FROM FINANCIAL INSTITUTIONS
• RAISING CAPITAL THROUGH PUBLIC DEPOSITS
• LONG TERM LOAN FROM A BANK
• INTERNAL SELF-FINANCE
SIGNIFICANCE OF HR PLANNING
• OPTIMUM UTILIZATION OF HUMAN RESOURCE
• HELPS IN PROVIDING RIGHT EMPLOYEES AND ACCURATE NUMBER
• HELPS IN DETERMINATION OF DEMAND AND SUPPLY
Basic requirements of a contract
Stages of Contract Management

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BENEFITS OF CONTRACT MANAGEMENT

• Increased security
• Increases control
• Diminished Risk
• Increased Visibility
• Increased Compliance
E. JEROME
McCARTHY
4 Ps of Entrepreneurship by Nick Jordan