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Manage cash flow in a unpredictable ever changing environment for a month and come back and tell us what you think a finance dept does cause from the comment it

by hdvpp 5y ago

Manage cash flow in a unpredictable ever changing environment for a month and come back and tell us what you think a finance dept does cause from the comment its quite clear you really dont know.

lifeisstillgood 5y ago
Perhaps here would be a great place to let a few hundred developers know. It's worth differentiating between allocation and flow - a million dollar spend can be hard to allocate to Project X, Y or Z. But it is usually simple to see it got spent on Developers, Sales people, rent, hardware licenses etc. As the film says, if you go up high enough, there is only one man with one budget.
- andrewlgood 5y ago
  And that man/woman is the CEO. Cash flow is the actual movement of money - paying payroll, paying vendors, receiving cash from clients (not just sending out the invoice). Lack of cash flow is what makes companies go bankrupt. Allocations are methods to attribute income and/or expenses to groups. It may be something simply such as dividing up an enterprise software license for email by the number of employees and allocating that expense to their department. It can be more difficult / squishy such as how to attribute brand marketing spend to various product lines. Generally, companies use allocations because they are trying to understand the profitability of something (a product, geography, client, etc). Your example of the million dollar spend is a good one. Very easy to see where the cash flow went (Developers, Sales people, rent, etc) but the important question to assist on future investment decisions is how much should be allocated to Project X vs Y vs Z. One would also need to understand how much cash was generated by Project X, Y, and Z so they can determine the ROI (Return On Investment) for each project. Knowing the ROI is important in making future investment decisions.

by hdvpp 5y ago

Manage cash flow in a unpredictable ever changing environment for a month and come back and tell us what you think a finance dept does cause from the comment its quite clear you really dont know.

lifeisstillgood 5y ago

Perhaps here would be a great place to let a few hundred developers know. It's worth differentiating between allocation and flow - a million dollar spend can be hard to allocate to Project X, Y or Z. But it is usually simple to see it got spent on Developers, Sales people, rent, hardware licenses etc. As the film says, if you go up high enough, there is only one man with one budget.

andrewlgood 5y ago
And that man/woman is the CEO. Cash flow is the actual movement of money - paying payroll, paying vendors, receiving cash from clients (not just sending out the invoice). Lack of cash flow is what makes companies go bankrupt. Allocations are methods to attribute income and/or expenses to groups. It may be something simply such as dividing up an enterprise software license for email by the number of employees and allocating that expense to their department. It can be more difficult / squishy such as how to attribute brand marketing spend to various product lines. Generally, companies use allocations because they are trying to understand the profitability of something (a product, geography, client, etc). Your example of the million dollar spend is a good one. Very easy to see where the cash flow went (Developers, Sales people, rent, etc) but the important question to assist on future investment decisions is how much should be allocated to Project X vs Y vs Z. One would also need to understand how much cash was generated by Project X, Y, and Z so they can determine the ROI (Return On Investment) for each project. Knowing the ROI is important in making future investment decisions.