EFFECTIVE BUDGETING AND CASh FLOw …naseba.blob.core.windows.net/images/EBCM_Sep_2013.pdfEFFECTIVE BUDGETING AND CASh FLOw MANAGEMENT Please, consider NOT to include this page in

September 15th - 18th 2013Media Rotana Hotel, Dubai

COURSE TAUGHT IN:• English

CERTIFICATION:• 20 CPD (CONTINUING PROFESSIONAL DEVELOPMENT) POINTS

EFFECTIVE BUDGETING AND CASh FLOw MANAGEMENT

Please, consider NOT to include this page in the printed version in order to preserve the environment

Disclaimer: This document is for promotional purposes only and shall not be considered contractually binding. The content of the event, its dates, venue, agenda or speakers may be subject to change during the course of the event’s preparation.


EFFECTIVE BUDGETING AND CASh FLOw MANAGEMENT

whO ShOULD ATTEND

Finance managers and accountants; any manager responsible for key commercial aspects of their business; and business owners and bankers.

Any manager responsible for delivering organisational objectives and targets, managers in charge of developing frameworks for improving public or private sector performance, and professionals responsible for preparing and controlling departmental budgets.

OUR PhILOSOPhy

naseba comes from the Japanese expression naseba naru, which when translated means: When there is a will there is a way.

The word naseba can literally be translated as: If you make it happen. naseba is all about creating opportunities for success.

Each of our Make it Happen courses gives professionals from different industries new skill sets, strategies and techniques so they can make it happen.

Overview:

Although today’s finance professionals are still required to fulfil their traditional role of maintaining good financial control, sound corporate governance and best practice, there is an increasing expectation that the best finance executives also support the organisation by providing relevant systems and information that enables strategic decision-making, adding value to the business and providing focused support to the Board. Two of the key areas where the finance executive can add real value to the organisation include budgeting and cash flow management and planning. This course looks at the key principles, best practice and up to date thinking in these two important areas and will provide delegates with the basis on which they can add further value to their own organisation.

Cash Flow

The statistics for corporate failures highlight the many companies that collapse every year because they did not pay heed to economic management practises. Effective cash flow management is the key to business survival and growth, yet many managers and business owners are unclear about the key drivers of strong cash flow and do not know the most important measures to monitor and control it. This course covers all aspects of cash flow management: What it is, how to measure and monitor it, and how to effectively control and improve it.

Budgeting

Success in any organisation depends on being able to develop and implement effective plans to achieve the organisation’s objectives. Although some see budgeting as a burden, the most successful organisations use the budget process to produce powerful plans to keep them on track to deliver their goals and vision. This course provides you with an up-to-date guide to the effective budgeting of your business including tailored cost control techniques.

TO REGISTER, CONTACT:Matthew Kalman, Project ManagerTel: +971 4367 1383 - Fax: +971 4367 2764Email: [email protected]



TRAINER’S PROFILE

Stan Dwight

Stan Dwight is an international training consultant providing training, coaching and advisory services to high growth firms in areas of business development, financial planning and reporting, cash-flow and working capital management, strategy, restructuring and change management.

With over 20 years of senior management level experience in international businesses, he has had notable success in building and leading finance teams in Europe, Scandinavia and the US.

For more than ten years Stan has gained considerable international expertise training finance professionals and senior non-financial colleagues. His specialty lies in developing key business finance skills and enabling participants to improve strategic decision-making;consequently improving their bottom line results.

Stan’s own experience includes strategic planning and budgeting, reporting and presenting the results of an international public limited company, asset appraisal, acquisition and divestment. He has also been involved in setting up new businesses in Europe and the US - presenting strategic investment proposals on a regular basis to boards, non-finance managers and executives.

After gaining his degree in Mathematics and Business, he became an Associate at the Chartered Institute of Management Accountants.He is now studying for a Master’s in Business Administration at Henley Business School.

Stan has extensive experience in working with finance and non-finance professionals both in the UK and internationally. As a result he has a wide experience of varying business and cultural practices and is able to bring this to bear in his work with current and future clients.

You will learn from an international trainer who has extensive experience and business knowledge.

• An international training consultant providing training, coaching and advisory services to high growth firms• More than 20 years’ senior management level experience in international businesses• Holds a degree in Mathematics and Business, and is an Associate of the Chartered Institute of Management Accountants

why ATTEND

PRE-TRAINING QUESTIONNAIRE

Prior to the training you complete a short questionnaire which enables the trainer to tailor

parts of the course to your industry and individual needs.

CERTIFICATES

The MIH Professional Training Academy is CPD certified which means that you earn

20 CPD points when you complete the course. Furthermore, you receive a certificate of

attendance from MIH.

TO REGISTER, CONTACT:Matthew Kalman, Project ManagerTel: +971 4367 1383 - Fax: +971 4367 2764Email: [email protected]



AGENDA

andanalyseanysignificantchangesinthebalancesheet.(Theyareinvitedtodiscuss issueswithintheirgroups).Thisisfollowedbyadiscussionwiththedelegates(within theirgroups)oftheirfindings.

The example sets the scene for a discussion on working capital.

• Understanding and managing the trade cycle • Understanding and avoiding over trading

Exercise:Thedelegatesareinvitedtostudyandfollowthroughthetradingstepsofa companythatisgrowingrapidlybutultimatelysufferingfromanacutecashflowcrisis.

• Understanding and avoiding over trading • The key components of working capital • Why working capital is key to a strong cash flow

Managing working capital • How should working capital be financed? • The trade-off between profitability and liquidity • Old and modern approaches to funding working capital

12:45 - 13:45 Lunch

13:45 - 15:00 Managing working capital (continued) Delegates are shown a brief videoto reinforce the points discussed before lunch and asked to draw out points to be discussed related to working capital optimisation

• Inventory management and optimisation: a discussion of key techniques including EOQ, months sales in stock and stock turnover • Credit management and optimisation: a discussion of key techniques including day’s sales outstanding and debtor’s turnover • Key Learning objective : the effect of good working capital management on not just improving cashflow but on increasing Return on Investment (ROI) • Understanding and managing the cash float

15:00 - 15:30 Coffee & tea break

15:30 - 16:00 Cash forecasting • Objectives of cash forecasting • A discussion of the Direct method • A discussion of the Indirect method using Excel™ and why this is a much more powerful tool for cashflow forecasting using key cashflow drivers. Includes a demonstration of a cashflow being created on excel.

Summary of learning outcomes from day one and an overview of day two

08:30 - 09:00 Registration & refreshments

09:00 - 10:30 The role of the finance professional • Financial management in the 21st century

Analysing and interpreting financial statements • Value creation for key stakeholders • Financial analysis:introduction to three key financial statements and the information they can provide to stakeholders

Exercise: Delegates are invited to examine the financial statement extracts of a company and answer questions on cash-flow, measures of financial performance, financialstrengthandanythingelsetheythinkrelevant.

• Introduce the working capital cycle with reference to the previous exercise

Exercise: delegatesare invited to studya set of questions r andasked toprovide answerstoquestionsoncompanyvaluationandtheinformationinthebalancesheet.

• A discussion of balance sheet limitations and profit/loss metric of EBITDA • Why profitable businesses might fail • The importance of cashflow • A final visit to the first exercise to draw out the cashflow statement and provide the connection to the working capital cycle


11:00 - 12:45 Sources of business funds Context Statement: A mastery of good cashflow management requires an understanding of the concepts and application of (1) business funding and its sources (2) working capital management and optimisation (3) capital expenditure (4) profit maximization

Sources of business funding • Advantages and disadvantages of equity finance to both provider and company • Advantages and disadvantages of debt finance to both provider and company • The consideration of cost, duration and gearing • LIBOR • Funding strategies: the context of the business life cycle, shareholder risk profiles and economic factors

Understanding working capital Exercise: Delegates are asked to study theP&L and balance sheet of a knitwear company.Theyareinvitedtocommentonthesalesandperformanceofthecompany

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AGENDA

• Why strong profits are an essential source of business funds • The vital difference between profit and cashflow • Gross margin and break-even: The key to understanding profit

Exercise: The delegates are invited to study key headline numbers of an electronics companyandprovideanswerstoquestionsonbreak-evenandsuggesthowthecompany couldimproveitsprofit(andthereforecashflow).

• Methods of pricing for products and services • Effective ways to improve profit

Exercise: The delegates are invited to study the operating budget of an oil services companybasedintheUAEandaskedtoexaminetheeffectsofpricingchangesongross marginandbottomline.

Measuring business performance • What key measures do companies use to measure performance? • Measuring return on investment • The risk return relationship • The relationship of profit margin and net asset turnover to return on investment • Why some companies are more profitable than others • Analysis of real life performance measurement • Pyramid of ratios and its application in improving return on net assets

12:45 - 13:45 Lunch

13:45 - 15:00 Developing and implementing key performance indicators (KPI) • The key drivers of cashflow • Identifying key success factors and KPIs • Seven characteristics of KPIs

An example of KSFs and KPIs within a UK (European-wide) airline

Exercise:Withreferencetotheirowncompanies,delegatesareinvitedtoproducealistof relevantsuccessfactorsfromwhichtheyareaskedtoproducesomekeysuccessfactors andthenrelevantKPIs


15:30 - 16:30 KPI - part 2 • Dashboards: concise management reports used to monitor and control cashflow and the indicators of cashflow performance • How to develop a powerful “cashflow control dashboard”

KPI case study The delegates are invited to work in their groups and design a dashboard based on a fictional case study. This requires application of the knowledge absorbed in the afternoon session. Each group then presents their dashboard to the room with an explanation of their ideas / thought processes.

09:00 - 10:30 Context Statement: A mastery of good cashflow management requires an understanding of the concepts and application of (1) business funding and source of, (2) working capital management and optimization, (3) capital expenditure (4) profit maximization

The capital investment process The trainer invites the delegates to suggest reasons why businesses make investments, the steps they take in doing so, how they are authorised and what categories of data is needed. With this in mind, discussions begin on the following: • Capital investment authorisation and control • The importance of risk

Capital investment appraisal methods: • Accounting Rate of Return (ARR) - advantages and disadvantages • Payback - advantages and disadvantages • Net Present Value (NPV) - How it works. Compounding versus discounting.

To illustrate the various categories of investment appraisal the delegates are referred to an example of an oil company where they work through the various methods. • The importance of the quality of data in using any method • Weighted average cost of capital (WACC) • The risk return relationship • The importance of ensuring that required return is future orientated along with estimates of future asset structure and future cashflows • Internal Rate of Return (IRR) - another technique and how it relates to NPV. • Advantages and disadvantages of discounted cashflow techniques • Effects of taxation and inflation

Exercise:ThedelegatesareinvitedtosolveaproblemusingtheNPVtechniqueofcapital investment appraisal where they have to make a financing choice between outright purchaseandleasing.


11:00 -12:45 Measuring financial strength By referring to the financial statements of a FTSE 100 company the following topics are discussed: • Analysing financial statements • Measuring business solvency: debt ratio and interest cover • Measuring business liquidity: current ratio and “acid test” ratio • Predicting business failure: Altman’s Z score

Understanding and improving profit Context Statement: A mastery of good cashflow management requires an understanding of the concepts and application of (1) business funding and source of, (2) working capital management and optimization, (3) capital expenditure (4) profit maximization

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AGENDA

• Customer profiling and market segmentation • Portfolio analysis and product life cycle models • Consolidating the detailed examination of external and internal factors via a SWOT analysis

Developing a winning strategy • The basis of competitive advantage • Porter’s generic strategies • Examples of winning strategies

To consolidate the morning session, the delegates are invited to study the second Tesco question where they are required to prepare a Porter’s five forces analysis of the supermarket sector in a chosen country, discuss the basis of Tesco’s competitive advantage in that country and recommend one of Porter’s generic strategies with justification for their choice.

12:00 - 12:45 What is budgeting? • Linking budgets to strategic objectives • The objectives of budgeting • The types of planning • Styles of budgeting • Dysfunctional budgeting

The delegates are invited to study a case study of a furniture manufacturer and to consider questions about the style of budgeting, its strengths and weaknesses, manager attitudes and any dysfunctional behavior and finally proposed changes to the budget system. The delegates are encouraged to work together in their groups and present their findings to other groups.

12:45 - 13:45 Lunch

13:45 - 15:00 Preparing a budget • The budget manual • Limiting budget factor • The sales budget • Overhead budgets • Capital expenditure budgeting • Cash budgeting • Preparing the master budget • Business seasonality, trends and budget phasing

Reference is made to the over-arching example and shows how the budget might be created and aligned with the overall strategic plan. The design of reward measurement is demonstrated to ensure that the behaviour of employees is consistent with both short term objectives and long-term strategy.


15:30 - 16:00 Managing budgets • Monitoring financial and other data • Responsibility accounting • Design of budget reports • Four golden rules for good feedback reporting

The third day will cover examples of how to link the company’s vision and strategic plan to medium term plans all the way through to annual operating budgets.

09:00 - 10:30 Creating and delivering value • Creating and articulating the organisation’s vision and objectives • Corporate planning, budgeting and control - all central to the value creation process • The positive feedback loop system

Strategic planning To set the scene the delegates are shown a short video clip of Michael Porter and his view of strategy • What is strategy? How does it relate to different levels of the business? • Introducing a framework for strategic planning • Vision or a clear direction; vision and mission statements. What is your vision or mission statement? • Corporate stakeholders and balancing their expectations and objectives - Mendelow’s power-interest grid

Delegates are invited to spend a few minutes mapping out their key organisational stakeholders on the power-interest grid. This is followed by a short discussion.

• Stakeholder conflict • Setting objectives; the concept of SMART

Analysing the external environment: Tools for strategic analysis

• Defining KSFs • Competitive benchmarking • Porters five forces • PESTLE Analysis • Risk analysis

The delegates are invited to carry out a five forces analysis of their own company with an emphasis on evaluating where they should be targeting resources in order to be able to compete on their “competitive playing field”

The delegates are also invited to study the “Tesco” case study of strategic growth and prepare a PESTLE analysis of the external environment in the chosen country of its next stage of international expansion.


11:00 - 12:00 Strategic planning (continued) Analysing the internal environment: Tools for strategic analysis • The internal resource audit • Value chain analysis and Porter’s value chain • Identifying and exploiting core competencies

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AGENDA


12:45 - 14:00 Developing and using rolling forecasts • The link between strategic planning, budgeting and forecasting • Using rolling forecasts • The differences between traditional and rolling forecasts • Key features of adaptive management processes • Developing rolling forecasts using key business drivers • Using the ‘what-if?’ analysis to make keydecisions and powerful business modeling with Excel™

Balanced Scorecard and KPI’s The trainer introduces a short video of Robert Kaplan (of Harvard Business School) setting the scene for the “balanced scorecard”, a strategic management system he developed with David Norton.

• Using the balance scorecard to manage strategy • The four perspectives of the Balanced Scorecard • The “three step” approach to developing a Balanced Scorecard • Defining key success factors (KSFs) • Real life examples of successful implementation

The delegates are invited to spend some time developing a balanced scorecard for their own companies to “take away”.

14:00 - 15:00 Lunch

15:00 - 15:30 Key point summary and conclusion

Certificate signing and hand out

09:00 - 10:30 Alternatives to traditional budgeting • Flexed and flexible budgets including an example of how these might work • Zero-based budgeting • Activity-based budgeting including an example of how this might work

Delegates are then encouraged within their groups to consider questions on what makes for a good budget system, some criticisms of traditional budgeting methods and reasons why firms still use traditional budgeting methods. These are then discussed at class level.

Limitations of budgets • Criticisms of conventional budgeting : Browne, Drucker, Welch • Welch’s two big criticisms of traditional budgeting • Three steps to better budgets


11:00 - 12:15 Beyond budgeting • Historical context • Beyond budgeting and adaptive management techniques and processes

Case study - SvenskeHandelsbanken This session is primarily taken up with a fascinating case study of a Swedish Bank, the changes in strategy it adopted and the corresponding way it changed its working practices including its approach to budgeting and the adoption of adaptive management processes. The delegates are invited to spend time carefully reading the case study and then, both individually and in their groups, respond to the questions at the end of the study. At the end of the allotted time of one hour, the groups are then asked to discuss their answers with each other.

• Reasons why budgets are still used

DAy FOUR

www.mihacademy.com@mih_Training

Documents

EFFECTIVE BUDGETING AND CASh FLOw …naseba.blob.core.windows.net/images/EBCM_Sep_2013.pdfEFFECTIVE BUDGETING AND CASh FLOw MANAGEMENT Please, consider NOT to include this page in