ENGINEERING

MANAGEMENT
MANAGING THE
FINANCE FUNCTION

GROUP II
C A RPI O, G ER LY MA E
C U NAN AN, J E NNY MA E
D E G U Z MA N, J US TI NE
D E VE R A, CL AIR E J EW EL
Finance Function of an organization
• is a part of financial management.
• It is the activity concerned with the
control and planning of financial
resources.
• It involves the acquiring and
utilization of funds necessary for
efficient operations.
• It is the source to run any
organization, it provides the
money, it acquires the money.
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Engineering firms need funds to finance their operations. To be
assured of continuous supply of funds, there is a need to manage
properly the finance function. When funds are made available in
right amounts at the right time, the engineering organization
may be expected to function properly. When funds are not
enough to finance planned activities, the risk of failure
objectives becomes apparent.
Major Fund Requirements of
an Engineering Firm
1. to finance daily operations
2. to finance the firm’s credit services
3. to finance purchase of inventory
4. to finance the purchase of major assets
FINANCING DAILY OPERATIONS
The day-to-day operations of the engineering firm will require funds to take
care of expenses. Money must be available for the payment of…
1. Wages and salaries
2. Rent Taxes
3. Power and light
4. Marketing expenses (advertising, entertainment, travel expenses,
telephone, and telegraph, stationery and printing postage)
5. Administrative expenses (auditing, legal services)
FINANCING THE FIRM’S CREDIT SERVICES
It is oftentimes unavoidable for firms to extend credit to customers. If
the engineering firm manufactures products, sales terms vary from
cash to a 90-day credit extensions to customers.
Construction firms will have to finance the construction government
projects that will be paid many months later.
FINANCING THE PURCHASE OF INVENTORY
The maintenance of adequate inventory is crucial to many firms. Raw materials,
supplies and parts are needed to be kept in storage so they will be available
when needed. Many firms cannot cope with delays in the availability of the
required material inputs in the production process, so these must be kept ready
whenever required.
The purchase of adequate inventory, however, will require sufficient funding
and this must be secured.
Sometimes, inventories unnecessarily tie up large amount of funds.
FINANCING THE PURCHASE OF MAJOR ASSET
Companies, at times, need to purchase major assets. When top management
decides on expansion, there will be a need to make investments in capital assets
like land, plants, and equipment.

It is obvious that the financing of the purchase of major assets come from long-
term sources.
 To finance its various activities, the Engineering firm
will have to make use of its cash inflows coming
from…

SOURCES OF
FUNDS TO 1. Cash sales

FINANCE AN 2. Collection of Accounts Receivables

ENGINEERING 3. Loans and Credits

FIRM 4. Sales Assets

5. Ownership contribution
6. Advances from customers
RISK MANAGEMENT
- an organized strategy for protecting and
conserving assets and people.
- to choose intelligently from among all the
available methods of dealing with risk in order
to secure the economic survival of the firm.
- if an unforeseen event catches your
organization unaware, the impact could be
minor, such as a small impact on your
overhead costs. In a worst-case scenario,
though, it could be catastrophic and have
serious ramifications, such as a significant
financial burden or even the closure of your
business.
Basic Methods for Risk Management
1. Avoidance
- a method for mitigating risk by
not participating in activities
that may incur injury, sickness,
or death.
- Smoking cigarettes is an
example of one such activity
because avoiding it may lessen
both health and financial risks.
2. Retention
- is the acknowledgment and
acceptance of a risk as a given.
- Usually, this accepted risk is a
cost to help offset larger risks
down the road, such as opting to
select a lower premium health
insurance plan that carries a
higher deductible rate.
Basic Methods for Risk Management
3. Sharing
- Sharing risk is often
implemented through employer-
based benefits that allow the
company to pay a portion of
insurance premiums with the
employee.
- When risks are shared, the
possibility of loss is transferred
from the individual to the group.
A corporation is a good example
of risk sharing — a number of
investors pool their capital and
each only bears a portion of the
risk that the enterprise may fail.
4. Transferring
- The use of health insurance is an
example of transferring risk because
the financial risks associated with
health care are transferred from the
individual to the insurer.
- Contractually transferring a risk to a
third-party, such as, insurance to
cover possible property damage or
injury shifts the risks associated with
the property from the owner to the
insurance company.
Basic Methods for Risk Management
5. Loss Prevention and Reduction
- this method of risk management
attempts to minimize the loss,
rather than eliminate it. While
accepting the risk, it stays
focused on keeping the loss
contained and preventing it from
spreading
- An example of this in health
insurance is preventative care.
  Sumitomo Mitsui Construction Co., Ltd. or
SMCC, is one of the best engineering firms in
Sumitomo Mitsui the Philippines. Guided by different principles,
Construction Co., Ltd. SMCC ensures that they are elite in both input
and output. SMCC offers many services such as
bridges, environmental, consulting, renovation,
construction, etc. SMCC is always in the pursuit
of client satisfaction and is also an eco and
human-friendly contractor.
• SMCC is an open-minded company where
employees can fully exercise their ability and
individuality. They maintain long-term
employment for their human resources and sets
the corporate up in a way which respects human
rights and beings. The management is great and
treats its employees with great benefits.
 HEALTH AND SAFETY POLICY STATEMENT
We aim to comply with all current and local health and safety legislation
and in line with Philippines Occupational and Health Standards and which
is relating to all work activities to ensure, by assessing risks and providing
and maintaining adequate control measures, that risks to employees and
others are either eliminated or reduced to a minimum. 
 We shall ensure through specific responsibilities and good health and
safety organization that all health and safety practices and procedures are
used and adhered to. 
 Health and Safety procedures and systems shall address the following issues but not limited to: 
  
• Provide the resources necessary to safeguard the health, safety and welfare of its own employees
and all associated with all works operations.

• Provide and maintain a good safe and healthy working environment and means of entry to and exit
from them, which are free from risk.

• Make arrangements for the safe use, handling, storage and transportation of articles, materials and
substances.

• Provision and maintenance of safe plant and equipment as well as safe use and handling by all
operatives.

• Provision of information, instruction, training and supervision to all employees and subcontractors
to ensure that they properly discharge their responsibilities and duties.

• Consultation with the employees on matters affecting their health, safety and welfare.

• Continually improve upon health and safety performance and systems.

Based on their Health and Safety Policy, they are
being specific about it. It is a big company, so it is
given that their insurance are also high. They won’t
be in the top list if they do not care about their
employees’ safety.
References
https://www.managementstudyhq.com/financial-function-types-importance-obj
ectives.html
https://www.slideshare.net/kandykctanguilan/managing-the-finance-function-57
880519
https://www.investopedia.com/articles/investing-strategy/082816/methods-hand
ling-risk-quick-guide.asp#:~:text=%205%20Basic%20Methods%20for%20Risk%2
0Management%20,through%20employer-based%20benefits%20that%20allow%
20the...%20More%20
https://www.ibm.com/topics/risk-management