Financial Adminstration

1. Sources of Funds
   1. Term Loans

      Anmerkungen:

      • Typically 1- 10 yrs payments are fixed and payed regularly with simple or compound interest
   2. Overdrafts

      Anmerkungen:

      • Monthly interest charges for operating facility, going over limit, amount overdrawn (fee varies) Temporary service for business fluctuations 
   3. Leasing & Hiring

      Anmerkungen:

      • Types of items vary on business nature e.g. premise, car, machinery *Funded asset is used as the main source of security Advantages- avoid upfront financial outlay, fixed monthly payments, upgrades, tax deductable expense, enables business growth + expansion 
   4. Business Credit Cards

      Anmerkungen:

      • Assist business in start-up phase Special Features to Ensure Business Usage Only - Issued to organisation - Strict card limit - Multiples cards for employee levels - Itemised purchases listings  Deals- cheaper annual + transaction fees, low interest rates + zero liability guarentee 'Interest Free Period' except when money is withdrawn Corporate cards can broker a personal deal
   5. Crowdfunding

      Anmerkungen:

      • Advantages - Marketing tool - Provides a forum for feedback on project - Inexpensive way to raise fund - New + innovative Disadvantages  - Limited amount that can be raised (depends on 'followers') - Exposes project  - Subject to security regulation Ways To Manage- 1. Choose right site (focus must fit business needs) 2. Realistic target + time frame 3. Create a campaign video + regular updates  4. Offer rewards (small incentives)
   6. Business Angels

      Anmerkungen:

      • Invest in new or expanding businesses  Provide capital, skills + contacts
   7. Venture Capital

      Anmerkungen:

      • Contribute money, skills + time Provide Capital For- 1. Research + development of an idea 2. Early stages of business 3. Later stage expansion 4. Management of buyouts + buyins

Anmerkungen:

• Policies + procedures needed to safeguard the businesses assets  Rules + division of responsibilities are critical to prevent fraudulent activity + errors

1. Cash Control

   Anmerkungen:

   • Cash is the most important asset of a business
   1. Cash Flow

      Anmerkungen:

      • Income coming into the business Positive cash flow outweighs outflow (business profit) Controlled through a business budget
   2. Cash Budgets

      Anmerkungen:

      • Looks at anticipated costs vs. revenue (projection) Valuable planning tool- forecasts results + accounts for all cash received and disbursed using source documents  Ensures Businesses Can - Prepare + reduce impact of any consequences - Proactively respond to results + take corrective action - Look at trends which will show predictions  - Plan for the future 
   3. Accounts Department

      Anmerkungen:

      • Primary Role- track revenue + expenditure  1. Accounts payable- record goods + services received + payments owed 2. Payroll- ensure business pays employees correctly, monitor off time (leave), pay taxes + reimbursements for expenses 3. Inventory- monitor cost vs revenue + balance optimum levels 4. Fixed Assets- record on a balance sheet with appreciation + depreciation 
   4. Source Documents

      Anmerkungen:

      • Accurately record cash received + disbursed
   5. Internal Cash Control Strategies
      1. Strategies Commonly Used
         1. 1. Rotating Employees
         2. 2. Evidencing all monies
         3. 3. Securing monies
         4. 4. Paying by EFT, credit card or cheque
         5. 5. Reconcilliation
         6. 6. Authorising Payments
      2. Improving Cash Position

         Anmerkungen:

         • Affected by- declining sales, delayed payments, economy (currency fluctuations) + cost increase of goods and services PREPARE- predict future outcomes/ issues
         1. Ways to Improve
            1. 1. Provide customer incentives for cash payments
            2. 2. Prepare a budget
            3. 3. Encourage a cash deposit on orders
            4. 4. Vigilant with suppliers wanting credit
            5. 5. Maintain good customer financial relations
            6. 6. Seek expert advice + outsource
            7. 7. Negotiate better trade terms
            8. 8. Asssess 'buying power'
      3. Debtor Control
         1. 1. Undertake Credit Checks

            Anmerkungen:

            • Checks credibility of potential  customer Fill out 'new application from' Confirm legitimacy through ASIC 
         2. 2. Approve Credit Limit

            Anmerkungen:

            • Communicated to customer + recorded in file Reviewed periodically + adjusted depending on trading record
         3. 3. Maintaining Accurate Accounting Records

            Anmerkungen:

            • MYOB- ensure records are recorded accurately 
         4. 4. Issuing Statements of Account

            Anmerkungen:

            • Used as a reminder + requires payment within a specified term
         5. 5. Charging Penalties

            Anmerkungen:

            • Must be stated in credit terms at approval stage 
         6. 6. Producing Aging Analysis Reports

            Anmerkungen:

            • Calculates average payment time of customer
         7. 7. 'Red Flagging' Overdue Accounts

            Anmerkungen:

            • 1. Reminder 2. Phone Call- can suspend accounts if necessary until debt is cleared
         8. 8. Debt Collecting

            Anmerkungen:

            • Outside agency to retrieve funds owed

1. Electronic Funds Transfer (EFT)

   Anmerkungen:

   • Enables an organisation  to electronically transfer funds daily from its nominated account directly into a suppliers B2B (Business to Business) payment option Lodgement Receipt is a proof of funds transfer confrimed with a remittance advice from supplier  Security measure is to nominate a daily limit for all transfers
2. BPAY Payments

   Anmerkungen:

   • Electronic Bill Payment Service  Invoice includes bpay logo, customer reference number (crn), amount to be payed + due date Receipt no. is proof or payment Security measure daily payment information should be checked to ensure payment is received 
3. Direct Debit

   Anmerkungen:

   • Organisations automatically receive an invoice payment into their selected account  Must get permission prior- Direct Debit Request Form 
4. Credit Card Payments

   Anmerkungen:

   • Customers pay for goods + services using credit cards Recorded through credit transactions Merchant service (costs money to have available) must be factored into businesses financial policy on credit transactions 
5. Cheque

   Anmerkungen:

   • Doesn't rely on internet but must be put into bank Record of fund is cheque butt No electronic copy
6. Cash Only

   Anmerkungen:

   • Advantages 1. Business receives funds immediately  2. Simplest form of payment 3. Limited fraud risk 4. No 3rd party fees Disadvantages  1. May lose customers who don't have enough cash with them 2. Card payments are more popular 3. Security risk having large amounts of funds on premise
7. Online Banking

   Anmerkungen:

   • Advantages  1. Convenience + Mobility- 24hrs service, make transactions virtually anywhere + faster to keep track of accounts 2. Better Rates- less overhead costs for bank 3. More Services- e.g. financial planning + budgeting tools  Disadvantages 1. Limited Banking Relationship- no personal customer service + less essential advice 2. Timing- not always immediate may be next day  3. Complex Transactions- hard to sort out online + communication issues frequently apparent 4. Security- prone to hacking, malware, identity theft + unauthorised activity 
8. Procedures for Receiving Monies

   Anmerkungen:

   • 1. Record through a cash register or renumbered receipt  2. Clear separation of duties  3. Keep in a safe place until deposited 4. Reconcile receipts with statements of account 

Anmerkungen:

• Affects- Production (adequate stock to make goods for sale)Cash Flow (reduces moving of stock if excessive)

1. Strategies
   1. 1. Buying in bulk

      Anmerkungen:

      • Receive Discounts
   2. 2. Take Advantage of purchase documents

      Anmerkungen:

      • Look at terms + conditions of seller- buyer agreement
   3. 3. Consider customer wants
   4. 4. Appropriate software to track + monitor stock levels
   5. 5. Stock taxes

      Anmerkungen:

      • Compare computer generated figures with actual items
   6. 6. Decide optimum stock levels + reorder times
   7. 7. Track slow/ fast moving stock
2. Prepare Against Damage

   Anmerkungen:

   • Choose appropriate warehousing, install security, surveillance equipment, lockable gates + guard patrols

1. Procedures
   1. 1. Asset Register

      Anmerkungen:

      • Record all new equipment
   2. 2. Lock away easily stolen equipment
   3. 3. Record allocated equipment
   4. 4. Regular stock takes
   5. 5. Review asset reigister

      Anmerkungen:

      • Identify equipment to be replaced, removed or upgraded

Anmerkungen:

• Best way to reduce financial impact of a risk occurring by transferring responsibility to insurance company

1. Business Should Undertake Own Risk Asessment

   Anmerkungen:

   • Identify potential risks  Check policy to avoid problems 
2. Choice of Insurer

   Anmerkungen:

   • 1. Research Business Insurance- understand products + services available to make decisions on specific needs 2. Contact its Affiliation Industry Association- advice on essential insurance cover for business type 3. Seek Professional Advice- recommends best insurance cover

Anmerkungen:

• Legal obligation to collect + manage employ financial information Employee Records- avoid financial errors Can result in legal implications- costly + produces negative publicty

1. Employee Records
   1. 1. Employment Contract

      Anmerkungen:

      • Complete an official appointment form
   2. 2. Tax File Number Declaration

      Anmerkungen:

      • If not provided employer is required to withhold tax at the top marginal rate
   3. 3. Banking Details

      Anmerkungen:

      • Need to provide banking details for pay
   4. 4. Timesheets

      Anmerkungen:

      • Employees record no. of hours worked each day to enable officer to calculate wages
   5. 5. Superannuation Membership

      Anmerkungen:

      • Employees must provide superfund membership no. as compulsory for employer to pay minimum superannuation guarantee contribution (SG) Paid regularly (each quarter)
2. Superannuation Options

   Anmerkungen:

   • Can increase salary package- additional voluntary contribution Self Managed Super Fund (SMSF)
3. Payroll Records

   Anmerkungen:

   • Legally required to keep for at least 5yrs min. Payroll Records Include- - Payroll information for each employee - PAYG records - Superannuation contributions - Produce payment advice slips - Report leave entitlements, allowances + bonuses - Fringe benefits tax (FBT)
4. Fringe Benefits

   Anmerkungen:

   • E.g. reduce rates loans, business car for personal use, paid entertainment, salary sacrificing, reimbursements of non- business expenses, living- away- from- home expenses * At discretion of employer

1. Internet Banking

   Anmerkungen:

   • Use Internet Banking To- - Check account balances - View + search transactions history - Transfer funds between accounts - Pay bills + schedule payments in advance  - View + service loans - Access banking information at any time Banks spend a lot to protect personal banking information secure sites with firewalls, default out-times + encryption coding systems Criminals steal money through- 1. Phishing 2. Mule Recruitment
2. Identity Theft

   Anmerkungen:

   • Information can be stolen without knowledge Main Fraudulent Acts- 1. Account Takeover 2. True Name Indentity
3. Online Purchasing

   Anmerkungen:

   • Organisations Must- - Check online suppliers are legitimate (ABN's) - Keep written records of all online transactions (purchases + orders) - Restrict no. of employees ordering online - Familiar with terms + conditions associated with online purchases
4. Protective Measures

   Anmerkungen:

   • Training Employees To Protect Against Theft- - Delete suspicious emails + remain vigilant  - Regularly updating protection + software - Secure business phone with PINS - Type actual address into browser when internet banking - Wipe computer prior to disposal - Use secure sites only for online purchases - Check for security symbols (Secure Socket Layers) - Don't provide credit details over the phone unless initated - Shred sensitive documents - Ensure incoming mail is secure - Ensure on-road employees don't leave documentation in vehicles