Finance Operations
How can DeFAI be used to reduce friction and maximize opportunities?
The right tools for current needs, the appropriate processes for stage of development, the right people to execute and improve capabilities.
- Platform: Property and Technology
- Process: Best Practice Protocols with Technology
- People: Teamwork of Processes with Technology
Continually re-evaluate and reinvest in platform, processes and people to fulfil potential for growth.
Performance
Key financial ratios to monitor performance include:
- Gross Profit Margin: measures profitability relative to costs.
- Current Ratio: indicates liquidity
- Return on Investment: measures return generated from investments.
Records
The three main financial statements:
- Income Statement: shows a company's revenues and expenses over a specific period, indicating profitability.
- Balance Sheet: provides a snapshot of a company's financial position at a specific point in time, showing assets, liabilities, and equity.
- Cash Flow Statement: details a company's cash inflows and outflows over a specific period, indicating liquidity.
Operating cash flow indicates whether a company can generate sufficient positive cash flow to engineer a stronger platform to expand into new opportunities.
Regular review of these financial statements and ratios allows for more informed decisions about budgeting, resource allocation, and investments. Overall, effective financial reporting provides valuable insights into a business's financial health, aiding in decision-making for future growth and sustainability
Commercial vs Compliance
| Business Procedure | Commercial Focus | Compliance Focus |
|---|---|---|
| Budgeting and Forecasting | Preparing budgets, forecasting revenues and expenses | Ensuring budgeting and forecasting processes comply with accounting standards |
| Financial Reporting | Preparing internal financial reports for management decision-making | Preparing financial statements in compliance with accounting standards for external stakeholders |
| Financial Analysis | Analyzing financial performance and identifying trends | Ensuring accounting systems and records are accurate and complete |
| Strategic Planning | Participating in strategic planning and decision-making | Providing input on compliance issues related to strategic plans |
| Capital Structure Management | Managing the company's debt and equity mix, investment decisions | Ensuring capital structure decisions comply with relevant laws and regulations |
| Risk Management | Identifying and managing financial risks | Implementing internal controls to mitigate financial and compliance risks |
| Transactional Activities | Managing cash flow, receivables, payables | Ensuring transactions are recorded accurately and timely, in compliance with accounting standards |
Accounting compliance is more about ensuring the company meets its obligations under accounting standards and regulations.