What is Financial Supply Chain Management, and what does it entail?
Financial supply chain management (FSCM) is the process of looking at all of your financial procedures as a whole rather than as separate processes. The procure-to-pay cycle, working capital management, and order-to-cash cycle business processes are all part of this end-to-end process. Everything related to ordering, invoicing, reconciling, and payment is covered under this heading. The overarching purpose of financial supply chain management is to get and retain visibility into all of these operations so that your supply chain may run as efficiently as possible while maximising cost savings.
A Supply chain professional must have some sort of Finance knowledge to understand the numbers. So today i am writing here 20 Financial Terms for Supply chain Professionals which they might need in their career path .
1- Inventory Carrying Cost – The cost of holding $1 of inventory for one year. It is usually expressed as Percentage. it includes cost of capital ,risk ,item Servicing and storage Space.
2- Inventory Turns – Cost of goods Sold divided by average inventory.
3- Liquidity ratio- Cash flow from operations divided by Current liabilities
4- Operating Expense – Every expenses other than cost of goods sold , Like Depreciation , interest ,taxes
5- Return on Asset – Net Income divided by Total Assets
6- Working Capital – Current Assets – Current liabilities, Working capital finances the buisness by converting goods and Services to Cash.
7- Current Asset – Cash and other assets that could be converted into cash during operating cycle
8- Current Liabilities- An Obligation that must be paid during normal operating cycle usually that would be one year.
9- Debt to Equity ratio- Long Term debt divided by shareholders ‘ Equity
10- Cash Cycle – Time between payment of inventory and collections of cash from receivables.
11- Earnings before Interest and taxes – Sales minus cost of good sold and operating cost
12- Earnings Per share – Net Earning divided by average number of shares outstanding.
13- Gross Margin – Sales minus cost of goods sold
14 – Income Statement – Summarises revenues and expenses, reporting the net income or loss for a specific accounting period.
15- Balance sheet – A snapshot of everything the company owes and owns at the end of the financial year .