8607-502 Making a Financial Case

Unit Overview

8607-502 Making a Financial Case is a unit within the ILM Level 5 Qualifications in Leadership and Management module. This is a unit that aims at improving the awareness and sensitivity to financial elements within the organisation. Leadership and management decision should be pegged on the financial elements that affect the performance of the organisation or that determine the ability to achieve organisational goals and objectives. This involves understanding the financial obligations of the company to its customers, both internal and external and seeking to meet these organisational goals and objectives.

The understanding of the financial elements within the organisation involves understanding the capital and reviewing expenditures and costs within the organisation. This information is critical in ensuring the leaders understand the role they should play in meeting the expectations of the stakeholders, including shareholders, employees, and customers, among others, in achieving ta return on investment from the organisation.

8607-502 Making a Financial Case is a unit that aims at improving the understanding of financial aspects within the organisation. The unit has the purpose of developing an understanding and ability to make a financial case when seeking to justify or report on practices and activities within the organisation. Leaders must have this ability to ensure that they can make informed decisions and reports in their areas of responsibility. The unit is taught in 14 hours go guided learning and contributes 3 credit values towards the completion of the ILM Level 5 qualification in leadership and management.

Suitability of the Unit

Stakeholders within the organisation responsible for overseeing the accomplishment of organisational tasks and responsibilities must understand the financial aspects associated with the organisation and their practice. This includes leaders who are assigned financial resources to pursue specific roles in their areas of responsibility. Understanding the concepts related to making a financial case helps individuals to effectively analyse the finances they receive and evaluate the use of these finances effectively and efficiently to achieve the desired goals and objectives.

This information also helps in critical elements such as the budgeting process for the leaders. 8607-502 Making a Financial Case is therefore suitable for leaders within the organisation who need to have the ability to effectively handle the finances within the organisation to promote the accomplishment of organisational goals and its obligation to customers.The unit is designed for practising or potential middle managers. This includes leaders in the regional, department or line levels within the organisation. The individuals have a large span of authority and oversee activities within a larger level of the organisation.

 Understanding how to make a financial case I important in ensuring they can fulfil their mandate within these specific areas of responsibility. However, the unit is not limited to middle managers. Other leaders, including junior leaders, team leaders and executive management, can use the information to improve their professional and leadership competencies. Employees and external consultants are also suited to the unit to ensure they prepare themselves for leadership positions and provide financial support in decision making respectively. The unit is critical for individuals with an influence on the financial commitments and performance of the organisation.

Learning Outcomes

Upon completion of the unit, the learner should be able to

• Understand and explain the differences between capital and revenue expenditure using examples that are derived from their areas of responsibility or organisation

• Understand the concepts of costs, including the classification of costs, and explain this principle using relevant examples from their organisation

• Understand the principles that are used in the allocation of costs within the organisation using relevant examples

• Use various financial evaluation techniques to inform a management decision.

Key Learning Areas

8607-502 Making a Financial Case is a unit that focuses on improving understanding of financial resources, financial obligations and financial performance of the company. As such, it focuses on learning areas that revolve around understanding financial concepts and principles. Some of the learning areas within the unit include:

Financial Concepts

This area of learning introduces the learners to the concepts and principles of financial analysis. The area of learning helps the learners to understand different forms of expenditure, including revenue costs and capital expenditure, as well as conduct a relevant breakeven analysis for their organisation. In this area of learning, learners are also introduced to the concept and application of marginal cost and standard costs, which are critical when creating budgets and allocating costs.

The learners are helped to effectively mast the influence of these forms of costs in making management decisions. This helps to ensure that their decisions include the financial elements that could affect the organisation in general or their specific areas of responsibility. The learners are also helped to understand the principles of costing, budgetary control and variance analysis to ensure they can effectively monitor their financial performance in their areas of operation and align these performances to the organisational goals and objectives. Lastly, this area of learning helps the learners to understand activity-based costing and effectively reduce costs within the organisation to maximise performance.

Making a Financial Case

This area of learning helps the learners to use the concepts of finance learned to evaluate the performance of the organisation and make financial cases to justify their decisions. The area of learning introduces that learner to financial evaluation techniques such as IRR, DCF and NPV. It helps them to understand factors that they should consider when making financial cases, such as recommending revenue expenditure. Lastly, the learners are guided to understand the most appropriate methods of reporting and presenting financial information to support recommendations made for management purposes.

Evaluation

On completion of this unit, the learners are put through an evaluation. A written assessment is used to determine the mastery of theoretical information and concepts learned within the unit. Supervised practice and simulated exercises are sued as formative approaches to evaluate the mastery of practical application of the concepts in real-world situations within the organisation.