BSBFIN501

Manage budgets and financial plans

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Topic 1: Plan financial management approaches

BSBFIN501 Manage budgets and financial plans

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• Every successful business needs to manage its finances effectively so

as to ensure the business can meet its commitments and overall
objectives.
• Budgets and financial plans are a way of achieving effective financial
management.

Topic 1: Plan financial management approaches

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FINANCIAL PLANS
Financial plans are also usually prepared for the business as a whole,
whereas budgets will be prepared for the company as a whole, as well as
different departments or activities such as projects.

Topic 1: Plan financial management approaches

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BUDGETS
• Budgets are a type of financial plan for a defined period.
• A budget estimates revenue and expenses over a period of time.

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TYPES OF BUDGET
• Sales budget
• Purchases budget
• Cost of goods sold budget
• Expenses budget
• Cash budget
• Master budget.

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HOW BUDGETS ARE DEVELOPED

Budgets can be developed in simple software such as Excel or in
accounting software.

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ACTIVITY: RESEARCH
Have a look at some of these business budgets in Excel:
https://templates.office.com/en-au/business-expense-budget-tm04035489
Then choose an accounting software of your choice and research how it can be used
to create a budget.
Make notes on your findings.

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ACCESS BUDGETS AND FINANCIAL PLANS

• As a manager, you will need to access the budget or financial plan
relevant to your work area.
• You will have to thoroughly review it to confirm that it is achievable to
communicate it to your team.

Topic 1: Plan financial management approaches

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BUDGETING METHODS
• Top-down
• Bottom-up
• Zero-based
• Rolling budget.

Topic 1: Plan financial management approaches

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ACTIVITY: RESEARCH
Research the advantages and disadvantages of each of the above budgeting methods.

Topic 1: Plan financial management approaches

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EVALUATE BUDGET AND FINANCIAL PLANS

Those responsible for managing finances need a sound understanding of
finances and their workings to confidently and professionally undertake
the tasks required in the day-to-day running of financial activities.

Topic 1: Plan financial management approaches

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ACTIVITY: WATCH
Watch the video on How to Write a Financial Plan for Your Business Plan in 2021.
Video: https://www.youtube.com/watch?v=AVZknOHPgO4 (04:19)
Discuss the following in class:
• What external and internal business factors must companies consider when
planning budgets?
• Why is it essential to prepare financial budgets at both organisational and
department levels?

Topic 1: Plan financial management approaches

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NEGOTIATING CHANGES IN THE BUDGET

• If you notice that the budget needs changes, you will need to discuss it
with others in your organisation.
• The person you need to address an issue can vary; it may be another
manager within the organisation or the person individually responsible
for budgeting, such as the Finance Manager.

Topic 1: Plan financial management approaches

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ACTIVITY: RELFECT
What do you think of when you hear the word “negotiation”?

Topic 1: Plan financial management approaches

BSBFIN501 Manage budgets and financial plans
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ACTIVITY: WATCH
Watch the video showing a negotiation scene.
Video: https://www.youtube.com/watch?v=0CdixDzE7I0 (01:00)

Topic 1: Plan financial management approaches

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ACTIVITY: READ
Read the articles on negotiation skills and techniques:
Article 1: https://www.skillsyouneed.com/ips/negotiation.html
Article 2:
https://www.pon.harvard.edu/daily/negotiation-skills-daily/top-10-negotiation-skills/
Take notes and keep them for future reference.

Topic 1: Plan financial management approaches

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CONTINGENCY PLANNING
Budgets and financial plans need to take into account contingencies.
Planning for contingencies means taking into account unexpected events
that can occur.

Topic 1: Plan financial management approaches

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ACTIVITY: GROUP PROJECT WORK – 1

Divide into small groups. Ensure you divide the work equally.
Part 1 – Prepare a budget
Part 2 – Negotiate budget
Part 3 – Contingency plan

Topic 1: Plan financial management approaches

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RECORD KEEPING
Australian taxation laws require businesses to maintain proper records of
their financial activities and present records when required by the
government.

Topic 1: Plan financial management approaches

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ACTIVITY: RESEARCH
Research the Australian Taxation Office (ATO) website.

Topic 1: Plan financial management approaches

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Topic 2: Implement and monitor financial

management plans

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The aim of implementing a financial plan is to ensure that:

• the managers and staff have the knowledge required to achieve the
finical budget.
• the staff understands their responsibilities and can maintain costs and
increase their productivity to achieve positive financial outcomes.

Topic 2: Implement and monitor financial management

plans
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COMMUNICATING BUDGET AND FINANCIAL PLANS

The first step in implementing financial management approaches involves
communicating agreed budget/financial plans to team members.

Topic 2: Implement and monitor financial management

plans
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FINANCIAL FUNDAMENTALS
• Assets • Profit and loss statement
• Liabilities • Cash flow statement
• Double-entry bookkeeping • Chart of accounts
• Equity • Fixed costs
• Financial statements • Variable costs
• Balance sheet • Journals

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plans
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BASIC FUNDAMENTALS OF FINANCIAL REPORTS

• Ledgers
• Ageing summaries
• GST taxation
• Cash accounting
• Accrual accounting
• Accounting principles on which the calculation and reporting of
deprecation is based.

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plans
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HOW TO COMMUNICATE WITH THE TEAM

• There are several methods to communicate and share information with
team members.
• Whichever methods are used to disseminate information, your aim
must be to ensure all relevant team members understand the budget or
the financial plan.

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plans
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MANAGING THE TEAM AND COMMUNICATION SKILLS

Understanding how to manage a team and communication skills also play
an essential role in providing details of the budget and financial plans to
your team as outlined.

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plans
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COMMUNICATION STYLES

ACTIVITY: READ
Read the article on communication styles:
Article:
https://www.forbes.com/sites/markmurphy/2015/08/06/which-of-these-4-communication
-styles-are-you/?sh=48d5e7913adb

Take notes and keep them for future reference.

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plans
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ACTIVITY: REFLECT
What is your communication style? Have you ever experienced difficulty
communicating in a workplace or community setting?

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plans
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ACTIVITY: WATCH
Watch the video on adapting communication styles.
Video: https://www.youtube.com/watch?v=TAi15RPlTa8&feature=emb_logo (02:08)
Take notes and keep them for future reference.

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plans
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ACTIVITY: READ
Read the following articles on:
• Effective communication:
• https://www.helpguide.org/articles/relationships-communication/effective-commun
ication.htm/

• https://www.skillsyouneed.com/ips/negotiation.html
• Working in teams and groups:
• http://www.slideshare.net/tejasyahremie/managing-work-groups-and-teams-6485
6791

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ACTIVITY: WATCH
Watch video on how to effectively communicate your strategy.
Video: https://www.youtube.com/watch?v=9XXmT5Bms6k (03:41)

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plans
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ACTIVITY: BRAINSTORM
Assume you are a manager of a customer service team. You would like your team to
know more about the new financial budget.

Topic 2: Implement and monitor financial management

plans
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SUPPORT TO TEAM MEMBERS TO PERFORM MANAGEMENT

OF FINANCES
It is also vital that your team receive support to ensure that they can
competently perform their required roles to help achieve financial
expectations.

Topic 2: Implement and monitor financial management

plans
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ACTIVITY: WATCH
Video: https://www.youtube.com/watch?v=riP7uBRbXbY (01:15)
Discuss the following in class:
• What a financial management system?
• What are the benefits of a good financial management system?

Topic 2: Implement and monitor financial management

plans
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ACTIVITY: REPORT
Write a report on providing support to employees to increase their competency in
management of finance.

Topic 2: Implement and monitor financial management

plans
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LEGAL REQUIREMENTS
• All workplaces must ensure they abide by legal requirements in
relation to financial management.
• Legal requirements can vary depending on the type of company but
key legal requirements that all business must comply with relate to
taxation law and GST.

Topic 2: Implement and monitor financial management

plans
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ACTIVITY: READ
Have a look at the following links on the ATO website to find out more about GST and
requirements:
https://www.ato.gov.au/Business/GST/

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plans
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ACTIVITY: RESEARCH
Using the Internet or available resources, look up the associated Act for each of the
listed, then complete the activities that follow.

Topic 2: Implement and monitor financial management

plans
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IMPLEMENT PROCESSES TO MONITOR FINANCIAL ACTIVITIES

Monitoring and controlling aspects of financial management is related to
having good governance and management of a company's finance
function in the separation of owners and management.

Topic 2: Implement and monitor financial management

plans
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MONITOR COST VARIATIONS AND EXPENDITURE OVERRUNS

Actual expenditure and costs must be monitored on an agreed cyclical
basis to identify cost variations and expenditure overruns.

Topic 2: Implement and monitor financial management

plans
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BUDGET VARIANCE
A budget variance can be seen as the difference between the estimated
amount for expense or revenue against the actual amount.

Topic 2: Implement and monitor financial management

plans
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CONTINGENCY PLAN: BUDGET VARIANCE AND MAINTAINING

FINANCIAL OBJECTIVES
Contingency plans are used when there are unfavourable changes that
occur, and they harm financial objectives.

Topic 2: Implement and monitor financial management

plans
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REPORTING ON BUDGET AND EXPENDITURE

• The needs for reports must be predetermined before preparing reports
so that analysts know what data is useful and accordingly extract them.
• Predetermining reporting requirements also saves time and effort.
• Standardising reports is also beneficial as it provides management a
basis for comparing data.

Topic 2: Implement and monitor financial management

plans
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ACTIVITY: READ
Read the articles.

Topic 2: Implement and monitor financial management

plans
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ACTIVITY: GROUP PROJECT WORK – 2

Budget Outcomes
Read the scenario information, then complete the tasks on Microsoft Excel.

Topic 2: Implement and monitor financial management

plans
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Topic 3: Review and evaluate financial

management plans

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A financial management review determines and appraises the adequacy

and effectiveness of an organisation's financial management processes. A
range of information could be used to inform the evaluation process.

Topic 3: Review and evaluate financial management plans

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WHAT SHOULD THE EVALUATION INCLUDE?

• How effective the bookkeeping and accounting systems are.
• Comparing the budget vs actual.
• Targets.
• Effectiveness of employees.
• Analysis of any successes.
• Review if goals and strategies are still aligned with the financial
management system.

Topic 3: Review and evaluate financial management plans

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WHAT SHOULD THE EVALUATION INCLUDE?

• Any external impacts or factors affecting the organisation.
• Internal controls review.

Topic 3: Review and evaluate financial management plans

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WHAT INFORMATION CAN BE USED TO INFORM THE

EVALUATION?
A range of information could be used to inform the evaluation process.
Staff feedback can be particularly useful.

Topic 3: Review and evaluate financial management plans

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ACTIVITY: RESEARCH
What would be other types of data collected to identify issues with financial
management processes?

Topic 3: Review and evaluate financial management plans

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ANALYSING VARIANCE
• Once all the data has been collected, it will need to be analysed to
evaluate the financial management approach.
• The analysis is conducted between the actual and budgeted finances
to determine the success or the shortcomings of the initial financial
plans.

Topic 3: Review and evaluate financial management plans

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MAKING RECOMMENDATIONS AND IMPLEMENTING

IMPROVEMENTS
Once data has been analysed and issues investigated, it will be possible
to make recommendations on how to improve the financial management
approach.

Topic 3: Review and evaluate financial management plans

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ACTIVITY: RESEARCH
Research a financial management approach to budgets and financial plans used by a
company of your choice.
You are then to critique the effectiveness of that approach, making recommendations
for change.

Topic 3: Review and evaluate financial management plans

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MAKING RECOMMENDATIONS AND IMPLEMENTING

IMPROVEMENTS
Factors that can be reviewed to make financial management process
effective are.
Staff competency

Topic 3: Review and evaluate financial management plans

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BSBFIN501 Manage budgets and financial plans