This workshop aims to equip delegates with the financial literacy to deploy financial tools and techniques to reach better decisions.
Introduction
This intensive workshop explores financial tools, techniques and methods which may be used in investment appraisal, ratio analysis, total cost modelling and negotiation planning.
This course is designed for:
The workshop will benefit procurement managers who wish to improve the utilisation of financial tools and techniques in operational procurement decision making.
Course structure
A practical one-day workshop consisting of six sessions and involving exercises, case studies, presentations and trainer-facilitated discussions. Each of the sessions will be led by an experienced facilitator and will feature the key principles and practical methods which may be used in the procurement and contracting process, together with practical case study sessions to maximise the transfer of knowledge from the workshop to the workplace.
Benefits of attending
Attendance will improve the ability to utilise financial tools of analysis to help reach more robust and defensible procurement decisions.
As well as this, delegates will gain three key benefits from attending:
- Increased confidence in their ability to contribute to investment appraisal, business cases and financial modelling
- Increased confidence in the ability to define and measure the best outcome and measure the benefits of particular choices
- Decreased likelihood that the procurement process will be undermined through poor decisions or that organisational risk will be increased through the selection of suppliers who subsequently fail
Key learning outcomes
- Demonstrate confidence in using selected tools to enhance the quality of decision-making
- Develop appropriate sourcing decisions based upon interpretation of supplier’s published financial accounts
- Participate in business case and/or investment appraisal decisions and contribute to robust decision-making
- Develop negotiation targets on a logical basis derived from analysis of supplier’s accounts, cost breakdowns or published industry data
Course Content
Finance for procurement
- How external events increase procurement “risk”
- Seeking higher “prosperity” through risk reduction
- Making procurement’s role more strategic
- Planning and controlling the organisation’s money
- Increasing profits through reducing costs
Supplier and own financial strength
- Predicting supplier insolvency
- Constructing the four key financial statements
- Understanding net profit and gross profit
- What published accounts can (and cannot) tell us
- Interpreting the financial statements using ratios
- Interpret supplier’s published financial accounts
Pricing and costing
- Cost planning to remain competitive
- The impact of changing volumes on supplier’s costs
- Examples of fixed, variable and hybrid costs
- Describing the benefits of Absorption Costing, Marginal Costing and Activity Based Costing
- Using breakeven analysis to plan for a given profit or ROI
Management of funds and resources
- Planning and controlling outcomes through budgets
- Key ways to manage shorter and longer-term funds
- Overcoming key budget problems
- The need to consider cash flow in any project
Purchasing decision making techniques
- Issues in capital and revenue decision making
- With two or more projects which would be the best project to invest in?
- The time value of money
- NPV, IRR and payback period as investment hurdles
- Calculation of the discount rate and the effect of risk
Key procurement lifecycle financial issues
- The key parts of the procurement lifecycle
- Predicting financial issues at the different lifecycle stages
- Financial risks before creation, during and after delivery of the contract
- Ways to eliminate procurement financial risks before signature
