BSBSMB406
Manage small business finances


Application

This unit describes the skills and knowledge required to implement and review financial management strategies on a regular basis.

It applies to individuals who operate a small business that stands alone, or is part of a department within a larger organisation. Individuals in this role interpret financial reports and other numerical data to develop financial management strategies.

No licensing, legislative or certification requirements apply to this unit at the time of publication.


Elements and Performance Criteria

ELEMENT

PERFORMANCE CRITERIA

Elements describe the essential outcomes.

Performance criteria describe the performance needed to demonstrate achievement of the element.

1. Implement financial plan

1.1 Identify financial information requirements and obtain specialist services, as required, to profitably operate the business in accordance with the business plan

1.2 Produce financial budgets or projections, including cash flow estimates, as required for each forward period, and distribute to relevant people in accordance with legal requirements

1.3 Negotiate, secure and manage business capital to best enable implementation of the business plan and to meet requirements of financial backers

1.4 Develop and maintain strategies to enable adequate financial provision for taxation in accordance with legal requirements

1.5 Develop, monitor and maintain client credit policies, including contingencies for debtors in default, to maximise cash flow

1.6 Select key performance indicators to enable ongoing monitoring of financial performance

1.7 Record and communicate financial procedures to relevant people to facilitate implementation of the business plan

2. Monitor financial performance

2.1 Regularly monitor and report on financial performance targets, and analyse data to establish extent to which the financial plan has been met

2.2 Monitor marketing and operational strategies for their effects on the financial plan

2.3 Calculate and evaluate financial ratios according to own or industry benchmarks

2.4 Assess financial plan to determine whether variations or alternative plans are needed, and change as required

Evidence of Performance

Evidence of the ability to:

operate the business according to the business plan, including:

adhering to legal requirements

meeting requirements of financial backers

defining strategies for debt collection and contingencies for debtors

managing cash flow

defining key performance indicators

communicating with relevant people

monitor the business against financial plan and make changes as required.

Note: If a specific volume or frequency is not stated, then evidence must be provided at least once.


Evidence of Knowledge

To complete the unit requirements safely and effectively, the individual must:

discuss benchmarking

explain financial decision-making relevant to the business

summarise significant financial indicators

outline purposes of financial reports

clarify preparation and interpretation of budget/actual reports

identify principles for preparing balance sheets and their interpretation

outline debt collection procedures or strategies

characterise principles for preparing profit and loss statements and their interpretation

discuss stock records and stock control relevant to the business.


Assessment Conditions

Assessment must be conducted in a safe environment where evidence gathered demonstrates consistent performance of typical activities experienced in the Management and Leadership – Small and Micro Business field of work and include access to:

business equipment and resources

relevant legislation, regulations, standards and codes

relevant workplace documentation and resources

case studies or where possible, real situations

interaction with others.

Assessors of this unit must satisfy the requirements for assessors in applicable vocational education and training legislation, frameworks and/or standards.


Foundation Skills

This section describes language, literacy, numeracy and employment skills incorporated in the performance criteria that are required for competent performance.

Skill

Performance

Criteria

Description

Reading

1.1-1.4, 2.1, 2.4

Evaluates complex text to determine legislative, regulatory and workplace documentation

Writing

1.2-1.5, 1.7, 2.1

Prepares written reports and workplace documentation that communicate complex information clearly and effectively

Oral Communication

1.3, 1.7, 2.1

Articulates clearly using specific and relevant language suitable to audience to convey requirements, and employs listening and questioning techniques to confirm understanding

Participates in verbal negotiations using tone and language suitable to audience

Numeracy

1.1-1.5, 2.1, 2.3, 2.4

Interprets numerical information to calculate all relevant financial information

Navigate the world of work

1.2, 1.4

Appreciates implications of legal and regulatory responsibilities related to own work

Interact with others

1.7, 2.1

Selects appropriate form, channel and mode of communication for a specific purpose relevant to own role

Get the work done

1.1, 1.2, 1.4-1.6, 2.2, 2.4

Develops plans to manage relatively complex, non-routine tasks with an awareness of how they may contribute to longer-term operational and strategic goals

Makes a range of critical and non-critical decisions in relatively complex situations, taking a range of constraints into account

Uses formal and informal processes to monitor implementation of ideas and reflect on outcomes


Sectors

Management and Leadership – Small and Micro Business