Unit FM4.07: Understanding financial management in facilities management

Unit FM4.07: Understanding financial management in facilities management

1. Understand financial reporting systems and processes

1.1 Identify systems for the management of budgets and finances (including cash accounts, nominal accounts (ledgers), VAT accounts, profit & loss accounts, balance sheets)

1.2 Describe the use of financial information contained in management reports (including budgeting, financial planning, business strategy, objective setting, pricing)

1.3 Explain cost centres and devolved budgets (supporting the explanation with example/s from the learner’s own experience and/or case studies, and including reasons for the use of cost centres and devolved budgets)

2. Understand the use of capital and revenue budgets in a facilities management context

2.1 Explain the difference between capital and revenue budgets (including the tax implications of depreciation)

2.2 Describe the budget approval cycle and processes. (illustrating the description with example/s from the learner’s own experience and/or case studies, and including setting budgets by reference to precedent and from first principles)

2.3 Describe the techniques used by facilities managers to manage capital and revenue budgets. (including the relevance to capital budgets of asset values, whole life costing, discounted cash flow (DCF), net present value (NPV), and balance sheet values)

2.4 Explain the methods to identify variance in budget and possible courses of action and remedies (supporting the explanation with example/s from the learner’s own experience and/or case studies)

3. Understand how to manage cash flow

3.1 Describe the basic principles, techniques and processes of using cash-flow projections for managing the flow of cash within the facility management business cycle (including the use of rolling projections)

3.2 Explain how a Facilities Manager manages cash flow. (including raising and processing of purchase orders, authorising payments, managing stocks of materials, flexing people resources and budgets, revenue protection)

4. Understand how to prepare financial cases

4.1 Describe the principles and techniques associated with preparing financial cases (including whole life costing, cost/benefit analyses, strategic fit, risk analyses and financial consequences of inaction)

4.2 Prepare a financial case for a project/purchase. (using example/s from the learners own experience and/or case studies)