Management accounting in banking

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Management Accounting is "the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information used by management to plan, evaluate and control within an entity and to assure appropriate use of and accountability for its resources. Management accounting also comprises the preparation of financial reports for non management groups such as shareholders, creditors, regulatory agencies and tax authorities" (CIMA Official Terminology)

Aims:

1. Formulating strategies;
2. Planning and constructing business activities;
3. Helps in making decision;
4. Optimal use of resources;
5. Supporting financial reports preparation;
6. Safeguarding asset.

Management accounting in banking:

Management accounting is an applied discipline used in various industries. The specific functions and principles followed can vary based on the industry. Management accounting principles in Banking are specialized but do have some common fundamental concepts used whether the industry is manufacturing based or service oriented.

Management accounting tasks:

• Variance Analysis
• Rate & Volume Analysis
• Business Metrics Development
• Price Modeling
• Product Profitability
• Geographic vs. Industry or Client Segment Reporting
• Sales Management Scorecards
• Cost Analysis
• Cost Benefit Analysis
• Client Profitability Analysis
• Capital Budgeting
• Buy vs. Lease Analysis
• Strategic Planning
• Strategic Management Advise
• Internal Financial Presentation and Communication
• Sales and Financial Forecasting
• Annual Budgeting
• Cost Allocation
• Resource Allocation and Utilization

Funding solution:

The largest single reason for business failure is lack of cash. Statistics show that up to 75% of small to medium sized companies operate day to day when managing cash-flow, often at the expense of creditors.

1. Invoice Finance
2. Factoring
3. Invoice Discounting
4. Asset Finance

Invoice Finance

Whatever the cash flow requirement, whether it is for developing new products/services, financing an acquisition or simply raising funds required for your existing business Invoice Finance enables you to release funds tied up in your outstanding invoices, allowing these valuable funds to start to work for you.

Factoring

With factoring, your invoices effectively become cleared funds, freeing up the capital for you to use immediately. You raise and issue your invoices, and in general lenders will advance an agreed pre-payment percentage to you immediately (up to 95% dependant on individual circumstances) and pay you the balance, less fees, on receipt from your customer.

Invoice Discounting

Invoice Discounting is similar to Factoring in that you raise and issue your invoices, and funds are advanced up to an agreed pre-payment percentage to you straight away (up to 95%) and pay you the balance, less fees, on receipt from your customer.

Asset Finance

Asset Finance can assist your business with hire purchase, finance lease or minimum term agreement facilities for both new and existing equipment.

Asset Finance enables the purchase of capital equipment without the financial burden of outright purchase. You pay for the asset with the income it generates or the costs saved and in turn this helps to maximize your working capital.

About the Author

invoice finance and
cash collection services: Arranged by inksmoor.  

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