Practical Finance
Essentials of Finance tell us the overall business value of financial reporting tools such as the balance sheet, income statement, cash flow statement and ratio analysis, but from a practical standpoint, how do such tools help you manage your specific department, campus or division?
I understand more how the budget is a both provides structure and reacts to support the administration.
I am eager to apply some of this course work to budget planning, but will need more study to put some of the "bigger concepts" into practice.
Hi Donald,
Thanks! it is particularly interesting that you look at potential trends from the annual reports. What has been targeted in the past, as well as results, can be, as you affirmed, an indicator of future financial health and initiatives.
Jay Hollowell
As an Adjunct Professor, I do not have influence or control of the financial statements or activities noted in the question. However, as a stockholder I have a strong interest in the financial health of the college. Since we are a publicly traded company I have access to both Annual and Quarterly Reports. In these reports I examine the Balance Sheet, Income Statement, and Cash Flow Statement to gauge the financial health of the college. In these reports I also read carefully the statements of the leaders of the school and often get valuable information from the notes contained in the reports. I keep back copies of the reports to see if what was targeted in past editions were address or transpired as a barometer of future activities by the college leadership in terms of improvements in technology, curriculum changes, and potential acquisitions.
You can take this from a bottoms up or top down perspective.
From a bottoms up point of view, if you are a departmental manager, you will be feeding up the chain of command inputs which get aggregated and aggregated to the top line. You must make realistic inputs or the budget, for example, will be simply a "house of cards." Also, you must manage your cash flow resources meticulously and according to plan. If you over spend then the company's financial positioning will be in jeopardy.
From a top down perspective, you receive guidance from corporate and must stay within those guidelines. You know that all departments like yours will be receiving their share of resources and hence all will be working together for the common good of shareholders.
These financial tools are the glue that holds together the collective financial thinking of the firm.
Bob
Basic understanding helps us compare our current performance with past performance. Doing a prior year comparison of financial statements and providing feedback to your team as to where you stand comparatively speaking provides competitive drive.
Having access to such information allows department heads and campus directors the opportunity to make a director and informed impact on our campus or department.
We review our finacial reports on a monthly basis and our budgets each quarter. Without these reports we would have no idea if we should expand at our school or downsize. It is everyones responsibility to look for ways to increase revenue and reduce costs.
I definitely agree this module helped me understand and be able to apply it to daily work and most of allwork along all departments and be able to reach my goals understanding quaterly budget reports for the campus.
it helps you to realize that units is very esential in terms of investment. However,top management don't usually share GL but only budget at the departamental level.
ed
Understanding financial statements and having access to them is essential to the success of your campus. Financial statements can be used as a roadmap on your campus journey to profitability and growth. Using the numbers as navigation aids can steer you in the right direction and help you avoid costly mistakes.
These tools definetly detail the life of the organization and its activity. I am able to budget and manage projects and report them effectively for both accouting and human resource departments, it also facilitates reporting and budget analysis.
I did not realize how every aspect of the nursing school I work for affects our finances. This course definetely has opened my eyes and showed me how to become more involved in helping our school achieve and exceed their financial goals in the future.
The cash flow statment is a very important part of our business planning and future growth of our school.
Hi Caren!
This is a very valid point and one that I do not see often. Being involved firsthand in the budgeting process not only affects one's approach to strategy and control, but also helps to see what activities contribute most to the bottom line. A good budgeting process can truly integrate planning and operations together!
Jay Hollowell
ML141 Facilitator
It is empowering as a manager to be involved in the budgeting process. As simple as managing the receptionist, knowing the incoming lead calls vary from high dollar tv ads to the minimum expense of a newspaper ad gives you a motivation tool for the staff to make sure every phone call is answered because you can put a tangible value on each caller. It also shows you the influence of a single purchase or a single missed sales opportunity can cause to help in your decision making processes.
In my campus, i need to review the budget and compare with the actual cost and expenses, now I have more tools to prepare reports and take decisions
Hi Janet and Todd,
Thanks so much for your comments; ideally the budget is everyone's business and our academic staffs are the closest to the revenue source - out students! It is imperative to train our school employees on how all positions and departments affect budgetary outcomes. One particular area comes to mind - our instructors are the link to our students: the classrooms and labs that they manage, the skills that they teach, the outcomes they assess and the professional relationships they develop with students all affect student retention - and student retention is a business measure!
Jay Hollowell
ML141 Facilitator
Todd,
I would agree that most Academics departments do not have a grasp on their finanical impact on the institution, based on my previous experience; however I beleive this is the fault of their Campus leader. I think this comes down to training and ensuring that the budgets are shared and explained to them so that they see the big picture. I have worked in institutions where the budgets are held so tight to the cuff that only the Campus leader had access to this information and now that I am in this position and you need the buy-in from your department leaders to be successful in all areas, I feel that it is important that they understand how their performance affects the budget and how they are able to make a difference in this area.
It does ultimately affect them when they want to purchase new equipment or hire additional personnel, so why not take the time to train them. They also have desires to move up in the organization and building their skill sets will help ensure that they are able to move up and keep them loyal to you and the company.
If your school is publicly traded this information is readily available. If you are strictly private and not for-profit however it may make things a little more complex.
