This intensive workshop explores financial tools, techniques and methods which may be used in investment appraisal, ratio analysis, total cost modelling and negotiation planning. In any Procurement and Supply Chain role it is critical that all practitioners have a solid understanding of all Financial Aspects that can affect their role. This course introduces delegates to the fundamentals of Accounting, the key elements of an Annual Report, Profit & Loss, Balance Sheet, Ratio Analysis etc. and the principles of costing and pricing.

This course is designed for:

The workshop will benefit procurement managers who wish to improve the utilization of financial tools and techniques in operational procurement decision making.

Benefits of attending

Attendance will improve the ability to utilize 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

How external events increase procurement “risk”

• Seeking higher “prosperity” through risk reduction
• Making procurement’s role more strategic
• Planning and controlling the organizations money
• Increasing profits through reducing costs

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

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

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

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

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