Outline
Volx Parts Plc is a vehicle company that has been in business operations in United Kingdom. The company has been a leader in offering expert services to clients and customers of different antique and Volkswagen vehicles. This paper gives a case study of the company while looking at the financial situation, and then giving possible recommendations and far forward towards strategic financial management and governance. The major approaches on proper financial management have been viewed and stated in the paper, which can be adopted by the company to survive the current financial situation.
Introduction
Volx Parts plc is one of the companies that have been on the London Stock Exchange, LSE, for a long time. This company specializes in refurbishing, repairing and servicing of vehicles and especially Volkswagens from different cities in United Kingdom. Following the current financial crisis, the company has faced a number of financial crises. This has called for a number of approaches to address the situation. Recently, there are major steps that have been undertaken to provide differentiated services to different clients. For instance, Volx Parts Plc is no longer holding main dealership linked status (Madura, 2008, p. 23). The new move is mainly concentrating on the provision of personal services to the Volkswagen. It is necessary to come up with a solution to the financial issues through adoption of a strategic financial management and appropriate governance.
Financial Strategy at Volx Parts Plc
Volx Parts plc usually buys its spare parts and manufacturing equipments via the Euro requirements. However, the Treasury Department has suggested to the company that it could benefit from cost savings through reviewing the purchase method. The main problem here is that the foreign currency remains unpredictable with a coalition government in place. The company also has been having a mix of funding sourced from share capital and from long-term financial balances from banks. However, most of these loans will be repaid probably within the following two years (Madura, 2008, p. 29). Over the last three years of recession, the directors have failed to recommend dividend payment as a means of payment, which safeguards cash flow while at the same time ensuring there is accumulation of enough funds to meet the repayment of loans. The exchange system has also been used in this organization to improve performance through which monetary exchange is done.
The directors have been considering the purchase of major machinery items in their effort to upgrade and refurbish the existing workshops in different parts of the country (Bennet & Wirth, 2009, p. 19). Whilst this is about to incur a significant outlay of capital, the directors behind this opinion strongly believe that this will definitely have positive gains and benefits on the company, and this is so with the reduction of costs. This is so because the total number of employees will be reduced while ensuring that new materials and machines are utilized much effectively and efficiently.
Currently, Volx Parts Company holds stock for months on average. The four months’ stock held is usually composed of body parts, panels and different engine parts, among others. Debtor days have currently been placed at 110 while the days for creditors stand at 75. Going by the opinion and views of the enthusiasm of the company’s customers, Volx Parts has over the years failed to adopt a new and aggressive system, which can assist in controlling credit. The company has strongly remained reliant on a word of mouth when it comes to new recommendations towards the expansion of customer base in the continent (Bennet & Wirth, 2009, p. 23). Majority of directors have been on a strong belief that with high values, most of the work being undertaken in the company will have to be reviewed with this kind of approach in urgency. The directors of this company have taken their time to discuss on the possibility of an appropriate management buyout. While that has been the case, there has been no sound decision that has been made in regards to the uncertainties of the world economy.
Strategic Financial Management and Governance
In this company, performance is the most important thing and a benchmark through which best goals will be realized in the organization. Following the occurrence of the above scenario, there is the need of coming up with an appropriate management which undertakes to solve all the problems within the financial operations in the company (Stern & Chew, 2003, p. 78). In that case, the solution to the financial uncertainty and morass faced in the organization is to have a management buyout. This will need the presentation of appropriate decisions towards making eventful operations, which shall make it possible to realize business goals.
This kind of management will be done by first safeguarding the capital situation and financial strategy. This will be done by having in place specific conditions and decisions, which favor management operations within the operations carried out. Financial management and governance will be done by putting into consideration the major economic situations and then having appropriate engagements, which will address the problem on the ground (Melicher & Norton, 2007, p. 39). Decisions arrived at should be able to present all possibilities in place and then look out for major managerial approaches which favors performance in the company. Towards sustenance of capital and appropriate management, the introduction of mechanization will lay off a number of employees in the company thus lowering the expenses, which have been incurred over the past years. This will reduce costs while at the same time retaining performance of the company. This ensures appropriate and quality delivery of services to the clients and customers of the company.
With any kind of financial issues, the management of all finances is something, which is quite important. This should be done for the immediate and the future finances of the organization. At Volx Company, there is the need of having financial management, which should be done on both long and short term basis. For this company, appropriate management of finance and governance is something, which should be done through proper planning of finances and also having long term decisions. This is what guarantees the realization of results in the business.
With the current economic situations, it would be a major requirement for the company to have administrative management of finance. Another major element with financial management as noted from the case study above is to address all possible sources of financial uncertainty and have overall identification and management of all risks. This will enable the organization to withstand the current financial crisis (Bennet & Wirth, 2009, p. 43). When it comes to some of the issues with financial management in this company, there should be the constant element of assessing the current financial situations. This has to be done appropriately other than involving major techniques, which shall entail quantification of the major finances to be managed.
Conclusion
Towards realization of better service delivery to the clients and customers of the company, the above approach is what will facilitate duties of financial managers and directors in the company. It will ensure that they look keenly into all available data or information to ensue that useful judgments have been passed and reached on to improve business performance within the company. Management of finance has to be applied in the company as an interdisciplinary approach that governs managerial aspects, integrating accounting modalities, while at the same time financing the corporation.
Reference list
Bennet, A., & Wirth, C. (2009). Fundamentals of Finance: financial institutions and markets, New Press, New York.
Madura, J. ( 2008). International Financial Management, Longman, New York.
Melicher, W., & Norton, E. (2007), Introduction to Finance: markets, investments and financial management, Prentice Hall, New Jersey.
Stern, J., & Chew, D., (2003).The revolution in corporate finance, Oxford University Press, Oxford.