Group 2

Financial forecasting and planning Process

Storing and Organizing Financial information Generating Financial reports Developing supportive tools for Planning

Objectives of Financial MIS

Primary Objective: Providing Working Capital and Long term loans Cost of capital at the minimum Second Objective: To meet the statutory compliance. Declaring the audited financial results. Returns to Government and Tax Aurities.

Tools and techniques of MIS in Finance:

1) Input Transaction Documents: Payments and receipts Documented through journal voucher. 2) Applications: Financial accounting system Produces financial results of the company. 3) Accounting: Accounts for all money transactions Sales, purchases, Inventory, expenses, etc.

Tools and techniques of MIS in Finance:

4) Query: Throw light on debit and credit balance. 5) Decision Analysis: Borrowing of short term capital, source of finance, analysis of debter and creditor. 6) Control: Financial controls.

Tools and techniques of MIS in Finance:

7) Reports: Statutory compliance and operations update Top management heavily relies on the reports. 8) Knowledge updates: Monthly trial balance, Stock valuation, Account recivable and payables, Cash positioning

MIS in Financial Planning

Elements of MIS Architecture

Elements of MIS Architecture

Transaction Level Data MIS Data Warehouse Data

Database Engine
Parser

MIS Front End

Query Formulation

Financial MIS - Architecture

Financial MIS - Architecture

Financial MIS
Decision Support System Enterprise Information Systems Transaction Processing Systems Business Reports

Internal business transactions

Business transactions from Extranet

Financial Statements

Control Statistics

Uses and management of funds

MIS - Components

Financial MIS - Subsystems

Budget Planning and Implementation
Strategic goal setting in financial terms Overall financial constraints Long term system-wide objectives Sales and income tracking Debt repayment schedule Creditor payment tracking Long term debt servicing Loan repayment and interest repayment Depreciation and accounting for new asset purchases Financial target reports Profit & Loss and other financial reports Flexible multidimensional and drill down analysis Cash flow management Cash in hand tracking Consolidated cash and liquidity statements

Revenue and Debt Management

Asset and Liability Management Financial Management and Reporting

Cash Management Subsystem

Financial MIS - Subsystems

Budget Planning and Implementation Master budgeting and scheduling with constraint management Long term cost allocation and attribution tied up with the initial financial objectives of optimization and/or minimization Revenue and Debt Management Revenue planning and matching with original master plans and post corrective measures implementation Instalment and interest monitoring with regular sync with original repayment plan and reserves Asset and Liability Management Total asset management and expenditure plans for both long term and current assets Repayment schedule management with overall financial parameters acting as input to the system Financial Management and Reporting Reporting standards and types for capital management, public reporting and management and cost reporting Custom reporting designed according to constraints Cash Management Subsystem Long term and short term inflow and outflows monitoring and reporting with drill-down abilities to individual components Matching cost component to financial master budgeting to discover anomalies

Sample Financial Reports in MIS

1. Cash Flow Report - Contents

Cash flows from operating activities Inventory Accounts Payable Interest Expenses Cash flows from investing activities Marketable Securities Non-recurring gain Cash flows from financing activities Capital Lease Bank loans short and long term

Sample Financial Reports in MIS 1. Cash Flow Report:

Sample Financial Reports in MIS

2. General Ledger Report- Contents

Sales Entries Region wise Division wise Product wise Revenue Entries Drill-down low level figures Cumulative figures Expenditure entries Miscellaneous entries Cost of sales entries

2. General Ledger Report

Sample Financial Reports in MIS

Sample Financial Reports in MIS

3. Trial Balance Report- Contents

Credit and Debit entries pertaining to

Accumulated Depreciation entries Inventory figures

Deposit figures
Accounts receivables Employee advances Withheld sales figures Sales Tax figures

Sample Financial Reports in MIS 3. Trial Balance report:

Sample Financial Reports in MIS

4. Balance Sheet Report- Contents

Assets - Current Savings Balances Investment Balances Assets Long Term Equipment values Long term loans and advances Liabilities Current Materials Payables Accrued Salary Balances Liabilities Long Term Capital term loans Equity and Reserves

Sample Financial Reports in MIS 4. Balance Sheet Report:

Sample Financial Reports in MIS

5. Transaction Report - Contents

Particulars
Transaction codes Transaction descriptions

Pre and Post transaction balances

Principle disbursements Transaction types Sweep in transactions Automatic payment transactions Authorized transactions

Sample Financial Reports in MIS 5. Transaction report:

Outputs of MIS
Scheduled Reports
Key Indicator Reports Demand Reports

Exception Reports
Drill Down Reports

Scheduled Report
Traditional form of providing information to managers
It is also called Periodic reports Report will be generated according to pre defined period It may be daily, weekly, monthly or annually

Key Indicator Report

It is a type of Scheduled reports
Provide the summary of the critical activities of the previous day Available at the beginning of the each day usually Associated with critical business functionalities that should has a

management great concern

Demand Report
Whenever mangers need, they can ask various reports from the system

(On-Demand) They are available when the managers require immediate access to vital information

Exception Report
They will be generated automatically by the system
They indicate that the management should take a decision Example : When the amount of orders exceeds the quantities available

in stores, it is needed to indicate the manger to take an action immediately

Drill Down Report

Information is summarized as a hierarchy
Highest level has more summarized description of data. Detailed of the information is higher in lower levels.

Types of Management Reporting

Reports for Top Management Level

Top Level Management is concerned with the formulating policies

planning and setting goals and objectives. Consist of Board of Directors including Chairman, Managing Directors, General Manager or any other chief executive Example
Reports on budgeted and actual profit Reports on sales and production Master budget Periodical financial reports

Plant utilization report

Machine and labour utilization report Project evaluation report Report on stock of raw materials, work in progress and finished goods

Samples
Budgeted vs Actual Profit Report Plant Utilization Report

Sales and Production Report

Reports on Stocks of Raw material, WIP & FG

Reports for Middle Management Level

Consists of the heads of all departments Concerned with the functioning and control of their departments. They may require more detailed information about their departments

and at frequent intervals. Examples:

Reports on material carrying cost, loss of material in the storage etc.
Reports on trends in the pertaining of various items of materials Reports on level of materials stock at the stores Reports on surplus and deficiency report Reports on orders received and orders executed Reports on cash sales and credit sales Reports on stock of finished goods Reports on market share and market potential

Samples
Market share and market potential Report Overtime working hours Report

Reports for Junior Management Level

Responsible for executing various policies assigned by

top management Constitutes of Foremen, Supervisors and sectional in charges etc. Examples:
Reports on labour efficiency variance Reports on ideal time, overtime and machine utilization

Reports on materials usage variance

Reports on credit collections and outstanding

Examples
Labour Productivity Report Outstanding Credit Report

 SAP Financial Information Management Software Optimizing performance and driving financial excellence Gain quick access to valuable financial data Cut costs across the close process Improve the accuracy and integrity of financial statements

 Sage 300 ERP Mid market Sage ERP line of accounting applications Formerly known as Sage ERP Accpac Various modules:

Accounts payable/receivable Alerts and alerts server Bank services Module Customer relationship module Fixed asset management G/L security General ledger

 Microsoft dynamics ERP and customer relationship management software applications Developed by IBM and Damgaard Data(Danish) Acquired in 2002 by Microsoft Traditional Core

General Ledger Bank management CRM Accounts receivable/payable Project accounting

Cost accounting Balanced scorecards Expense management Payroll management

Extended Core

 Greentree Business Software : Marketed under the brand name CBA Most widely used software in New Zealand and Australia (most successful midrange software) Huge demand in countries like UK and USA Various functionalities:

Financial management CRM Service and asset management Job Cost management

 Perfios PERsonal FInance One Stop- Indian Web based Finance application It synchronizes all the finance for example Bank accounts, Credit cards, Mutual Funds, Equity accounts, Insurance policies, Loans, Fixed deposits, etc. All information in one account Tax planning and preparation Financial health tracking and analysis Financial Education

Advantages of MIS in finance

Quick decision making
Enhanced scheduling and forecasting capacity Greater efficiency Integration of functional process and financial resources

of business Competitive advantage Greater control and security Accounting benefits Increased reliability Faster reporting

Disadvantages of MIS in finance

Disadvantages : Expensive Maintenance Possibility of becoming ineffective Continuous monitoring Lack of flexibility to update/ modify itself Doesnt takes account into factors like morale of employees, attitude of workers, etc. Unemployment

About the company

The Indian Hotels is recognised as one of Asia's

largest and finest hotel company. Incorporated by the founder of the Tata Group, Mr. Jamsetji N. Tata, the company opened its first property, The Taj Mahal Palace Hotel, Bombay in 1903. The Taj, a symbol of Indian hospitality, completed its centenary year in 2003. Taj Hotels Resorts and Palaces comprises 93 hotels in 55 locations across India with an additional 16 international hotels in the Maldives, Malaysia, Australia, UK, USA, Bhutan, Sri Lanka, Africa and the Middle East. EBIDTA for FY 13 was Rs 166.79crore, a growth of 30%in EBIDTA

Porters Competitive Forces Model

New market entrants Suppliers Customers
International Players entering the market Various domestic unorganized players are also participating in hotel sector High capital requirement is entry barrier Shortage of human resources

The more suppliers a firm has, the greater control it can exercise over suppliers

The buying power of luxury hotel patrons is very high because of largely undifferentiated products and very low switching costs

Substitute products
Competition due to Rivalry

Service Apartments and Company owned guesthouses.

Competitors in market space continuously devise new Products New efficiencies Switching costs

Value Chain Analysis

Research
Development of new products Improvement of existing products Customer surveys Broadening of customer base

Service Production
Improvement of structures Maintenance work Purchasing work Outsourcing of services Staff training and professional development

Service Providing
Reception services Hall service Room service Additional services

Marketing
Booking Services Communication Promotional formulas Public relations Customer Database

IT Strategy
Identify business goals and strategies. Break strategic goals into concrete activities and processes.

Measure actual performance.

Determine how IT can help achieve business goals.

Identify metrics for measuring progress.

Front Office Management

Reservations Registration Cashiering

Day End Process

Guest History

Housekeeping

Reports

Lookups

Reservation Analysis

Room wise Analysis

Billing Information

Application
Low-cost leadership Efficient customer response system Product differentiation

Focus on market niche.

Use information systems to enable specific market focus, and serve narrow target market better than competitors.

Analyzes customer buying habits, preferences

Advertising pitches to smaller and smaller target markets

Analyzes data collected on guests to determine preferences and guests profitability

Benchmarking competitors

 To improve the lives of the local community in

Dungarpur, Rajasthan, a voluntary group called Peoples Education and Development Organisation (PEDO) encourages local women to form SHGs and to take responsibility of their own savings and credit.

KEY STAKEHOLDERS
Ministry of Communication and Information

Technology reviewed the proposal sent by PEDO and facilitated the implementation UNDP funded the project National Institute for Smart Governance responsible for overall monitoring and evaluation of the project SHGs ultimate beneficiary

PEDO now, concentrates on following major areas of concern: 1. Women empowerment through micro-credit. 2. Environmental up gradation through natural resource management. 3. Promotion primary education and Child rights 4. Rural decentralization and strengthening Panchayati Raj Institutions 5. Rural housing 6. Promoting self-sustained Institutions 7. Irrigation and Agriculture Development

Pedo Structure

 Each SHG meets monthly every member has a separate

ledger where all financial transactions pertaining to that particular member are recorded. These transactions are related to members savings, loan borrowings and repayments. On average, there are at least 85 90 transactions per group in a meeting.

Technology Used
MITRA project incorporates four kinds of technology: A windows based mobile handset for data entry at

village level A web based MIS software that gathers all the data to generate relevant financial and accounting reports Bluetooth technology to print the receipt A handheld printer to generate the receipt at SHG

Information flow in MITRA

Financial Management Information System in Developing countries

FMIS in Developing countries

Current Scenario
Large built up of files Misallocation of resources Lack of accountability Lack of transparency Lack of effectiveness and efficiency

Features of FMIS
Management tool Provides a wide range of financial and nonfinancial information Maintains accountability and transparency Capability of continuous upgradation Have dedicated modules to handle monthly short term and long term budget estimates Mechanize all possible routine tasks

Budget using FMIS

Core Functions
General ledger Accounts payable Accounts receivable

Payroll system

Cash management

Debt management

Revenue administration

Purchase or procurement

Budget planning

Countries using FMIS

Tanzania
Integrated financial management system

Ghana

Kenya

Malawi

Tanzania
Central Server

1996- Chronic problems in the financial management of the government Abolish all payment offices in the ministries, departments, and agencies (MDAs) 1998/99 Integrated Financial Management System (IFMS) in ten selected MDAs

Office of the Accountant General (AG)

Dedicated Network

W2 W1

W3

Disadvantages of FMIS
Short project deadline to implement FMIS Unclear authority

Unclear basic functionalities

Failure to reengineer the procedures

Overestimation of information to be included

Lack of incentives

Industry Applications(1/2)
Softwares Used SAP ABAS
Optima

Bann

BPCS

Datatex

Movex

Healthcare

Improved decision making and outcomes with integrated analytics Reduced readmissions, medical errors, and average cost per case with better KPI monitoring Real-time patient care anytime, anywhere with mobile healthcare apps Integrated patient financial processes for faster billing and collection times Increased patient satisfaction due to personalized patient interaction and services and real-time collaboration

Healthcare

Speed time to market for desirable new vehicles with our software for the automotive industry. Understand customer demands for product innovation, quality, and price and then meet expectations without compromising bottom line. Discover the advantages of software designed specifically for auto manufacturers, suppliers, and sales and service organizations. Greater visibility throughout product and customer lifecycles Accelerated product development, manufacturing, and delivery Faster, more informed decision making and higher profit margins Differentiated and personalized customer experiences

Industry Applications(1/2)
Healthcare
Meet the digital consumers demand for instant, relevant content anytime, anywhere with our software for the media and entertainment industry. Understand and predict audience requirements, and respond with interactive, satisfying experiences that create value for both consumers and advertisers. Improved processes for acquiring, creating, managing, and monetizing media content Faster time to market for sought-after content and increased product success rates

Operations

Improved average project margin and reduced margin variance Fewer unexpected project cost over-runs Faster, savvier decision making with access to real-time insights Maximized labor and equipment productivity Accelerated processing and monetization of project scope changes Better project cash position and liquidity Reduced number of days revenue outstanding (DRO)

IFRS
IFRS is a basis for financial reporting

More than 112 countries use IRFS in preparation of their financial statements

QUESTIONS

1) What is FMIS? What are various subsytems in FMIS

Financial Management Information Systems accumulate and analyze

financial data in order to make good financial management decisions in running the business. FMIS is the acronym for the term Financial Management Information Systems.

The basic objective of the financial information system is to meet the

firm's financial obligations as they come due, using the minimal amount of financial resources consistent with an established margin of safety. Outputs generated by the system include accounting reports, operating and capital budgets, working capital reports, cash flow forecast, and various What-If Analysis reports. The evaluation of financial data may be performed through ratio analysis, trend evaluation, and financial planning modeling. Financial planning and forecasting are facilitated if used in conjunction with a Decision Support System (DSS).

Contd .
Generic architecture of an FMIS system

Financial MIS
Decision Support System Enterprise Information Systems Transaction Processing Systems Business Reports

Internal business transactions

Business transactions from Extranet

Financial Statements

Control Statistics

Uses and management of funds

Contd..
Budget Planning and Implementation Revenue and Debt Management Asset and Liability Management Financial Management and Reporting Cash Management Subsystem
Strategic goal setting in financial terms Overall financial constraints Long term system-wide objectives

Sales and income tracking Debt repayment schedule Creditor payment tracking
Long term debt servicing Loan repayment and interest repayment Depreciation and accounting for new asset purchases Financial target reports Profit & Loss and other financial reports Flexible multidimensional and drill down analysis Cash flow management Cash in hand tracking Consolidated cash and liquidity statements

Q2 Explain in brief different reporting systems required for top/middle/operational management

Top Level Management is concerned with the formulating policies

planning and setting goals and objectives. Example

Reports on budgeted and actual profit Reports on sales and production Master budget Periodical financial reports Report on stock of raw materials, work in progress and finished goods

Middle Level Management Consists of the heads of all departments Concerned with the functioning and control of their departments. Examples:

Reports on material carrying cost, loss of material in the storage etc. Reports on trends in the pertaining of various items of materials Reports on level of materials stock at the stores Reports on surplus and deficiency report Reports on orders received and orders executed

Contd..
Operation Management Level Responsible for executing

various policies assigned by top management Constitutes of Foremen, Supervisors and sectional in charges etc. Examples: Reports on labour efficiency variance Reports on ideal time, overtime and machine utilization Reports on materials usage variance Reports on credit collections and outstanding

What are the technologies used in FMIS? What are the emerging trends