The World without Bankruptcy Laws
Bankruptcy is one of the natural states which a company may find itself in. Entrepreneurship is primarily about taking risks. When companies take risks, some of them succeed, whereas others fail. Hence failure is a natural part of the business. However, many critics of bankruptcy laws believe that there isn’t a need for an elaborate […]
The Wirecard and Infosys Scandals are a Lesson on How NOT to Treat Whistleblowers
What is the Wirecard Scandal all about and Why it is a Wakeup Call for Whistleblowers Anyone who has been following financial and business news over the last couple of years would have heard about Wirecard, the embattled German payments firm that had to file for bankruptcy after serious and humungous frauds were uncovered leading […]
Why the Digital Age Demands Decision Makers to be Like Elite Marines and Zen Monks
How Modern Decision Makers Have to Confront Present Shock and Information Overload We live in times when Information Overload is getting the better of cognitive abilities to absorb and process the needed data and information to make informed decisions. In addition, the Digital Age has also engendered the Present Shock of Virality and Instant Gratification […]
Why Indian Firms Must Strive for Strategic Autonomy in Their Geoeconomic Strategies
Geopolitics, Economics, and Geoeconomics In the evolving global trading and economic system, firms and corporates are impacted as much by the economic policies of nations as they are by the geopolitical and foreign policies. In other words, any global firm wishing to do business in the international sphere has to be cognizant of both the […]
Why Government Should Not Invest Public Money in Sports Stadiums Used by Professional Franchises
In the previous article, we have already come across some of the reasons why the government should not encourage funding of stadiums that are to be used by private franchises. We have already seen that the entire mechanism of government funding ends up being a regressive tax on the citizens of a particular city who […]
For an organization to succeed in the global and competitive world, it needs to have a robust strategic plan in place. The strategic plan is made of several definite targets it aspires to achieve. Some of the targets are internal (Productivity improvement, sound finance discipline, etc.) as well as external (EPS, Stockholder value, etc.). Therefore, organizations strategic consist of long-term planning, organizational development, treasury management and value management.
Financial planning and forecasting are integral part of strategic finance. Organization needs to develop strategic finance tools, which can take into account scenario analysis as well as modeling capabilities. A strategic finance tool should help in quickly developing finance models and evaluate various financial scenarios. These financial scenarios can suggest sophisticated debt and capital structure management. Strategic finance tools should be connected to enterprise performance management tools as well as other databases. A strategic finance tool should provide a convincing finance solution which further can be used to set internal targets, perform financial analysis and provide data to perform informed decision making.
Organization requires a robust and flexible finance tool to analyze ever evolving financial and business market. The finance tool should be capable of doing what-if scenario modeling. It should also allow development of finance models, which can be used to carry our impact analysis based on dynamic variables and reach targets, which can be assigned to other departments.
At present, most of the finance modeling is done through spreadsheets. However, these spreadsheets are somewhat difficult to manage, lack data integrity and do not integrate with other aspects of finance modeling like strategic planning and treasury.
Strategic finance module helps the organization in the sensitivity analysis as well as what if analysis allowing to gain deeper understanding of various strategic scenarios and develop business intelligence. Since the strategic finance tool is integrated with other business modules all possible disconnect between strategic targets, and operational plans are analyzed.
Finance modeling provides insight into impact of strategic decisions on company’s bottom line, cash flow, balance sheet and shareholder value. Strategic finance module provides the bridge between finance modeling and financial analysis. Its gives flexibility in developing finance models and measure impact on financial statements. Strategic finance modules have an in-built finance model which saves time from designing and developing spreadsheet based models. Finance modeling tools' users need not be trained in writing complex logic statements. The finance tool provides users flexibility of adding as many complexities as required. The finance tool provides users to invest more time in doing analysis and developing alternate strategies rather spending time in validating data.
Any strategic finance decision has a direct impact on cash flow of the company. In turn cash flow impacts the balance sheet, hence financial performance within the company. The strategic finance tool connects finance decision-making process to working capital management to capital structure to taxation. This connection adds value to organization and reduces overall cost of capital.
A strategic finance tool also has a consolidation module which provides the total view to decision makers.
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