Finance

• is a field that studies and addresses the

ways in which individuals, businesses, and

organizations raise, allocate, and use

monetary resources over time, taking into

account the risks entailed in their projects.

The term finance

• may thus incorporate any of the following:– The study of money and other assets; – The management and control of those assets; – Profiling and managing project risks; – The science of managing money; – As a verb, "to finance" is to provide funds for

business or for an individual's large purchases (car, home, etc.).

Finance Environment

TraditionalTraditional ATMATM InternetInternetFEDIFEDIIC CardIC Card

FINANCIAL EDI (FEDI)

• Combines Electronic Funds Transfer (EFT) with EDI capabilities to electronically transmit data to your organization. 

• Allows for the electronic exchange of payment

and remittance information between the Commonwealth and our Trading Partners.

•  

HOW FEDI WORKS FOR A VENDOR? (2)

4. The DEPARTMENT OF ACCOUNTS

processes the payment requests and

transmits the payment without the

remittance information, to the BANK. 

5.While the payment information is transmitted to the Bank, the remittance information is transmitted to the Department of Accounts' website.   

HOW FEDI WORKS FOR A VENDOR? (3)

6. The BANK passes the payment to the

vendor's BANK via the banking

network. 

7. The vendor’s BANK credits the payment

to the vendor’s account by the opening

of business on the payment due date. 8. The vendor posts its accounts receivable

from the remittance information.

GLOSSARY 

• Trading Partner (vendor)– An organization or person who has signed up with the

Department of Accounts for Financial EDI program. 

•  DOA (Department of Accounts)– The agency that maintains the general ledger system

that processes payment requests to Trading Partners (vendors) and that maintains the EDI payment accounts.

Payment Format of FEDI

• When the bank receives both the payment and remittance data –

– Detailed payment information is contained in the Entry Detail Record, and

– Remittance information is contained in the Addendum Records.

  

ENTRY DETAILRECORD

ADDENDUMRECORDS

 

Contains: 

•trading partner's name

 

•bank account number

 

•total/net amount paid

 

•EDI trace number

 

•settlement date

 

Contain: 

•State agency originating payment and telephone number

 

•invoice number

 

•invoice date

 

•customer account number

 

•amount paid

 

•invoice description

The Benefit of FEDI

• Transmitting and receiving payment and payment-related information electronically will save cost of processing and receiving paper checks. 

Allocating Resources: Budgeting

• Budgets

– Numerical plans for allocating resources (e.g., revenues, expenses, and capital expenditures).

• Used to improve time, space,

and use of material resources.

• Are the most commonly used and most widely applicable planning technique for organizations.

Types of Budgets

Source: Based on R.S. Russell and B.W. Taylor III. Production and Operations Management (Upper Saddle River, NJ: Prentice Hall, 1995), p. 287.