Page 86 - IMDR MSME BOOK 2021

Managing Finance in Micro, Small & Medium Enterprises
Costs Management
Good nancial decisions come from an effective cost
management strategy designed to maximize value and
minimize both initial and ongoing costs. It helps a rm
forecast future expenditures in an effort to reach their
budgeting goals.Cost management system helps in
identifying, collecting, classifying and collating
information that can be used by managers in planning,
controlling and taking decisions to keep costs in the
desirable limits. A break-even analysis is a nancial tool
which helps to determine at what stage the company, or
a new service or a product, will be protable. It is found
that the (87%) rms have complete understanding of the
quantum and signicance of the xed cost and its role in
cost management and have clear idea about the
breakeven analysis and breakeven point of their specic
products. The majority of the respondent rms are
agreed that break even analysis helps them in budgeting
and setting targets, in determining margin of safety, in
cost control and monitoring the business operations and
protability and to devise a pricing strategy for the
products offered by the rm.
Cash Budgeting
Cash budgeting should ensure that organizational
expenditures match planned cash ows. Cash budgets
are generally used to estimate whether a company has a
sufcient amount of cash to uphold regular operations. A
cash budget helps avoid a shortage of cash during
periods in which a company encounters a high number
of expenses .It is found that out of 199 respondent rms
110 rms i.e 55% have prepared the monthly rolling cash
budget for next one year of operations. It is found that
majority of the respondent rms have shown their
agreement to the usefulness of cash budgeting in
determining and assessing the protability levels, in