Dun & Bradstreet, the leading global provider of B2B data, insights and AI-driven platforms, helps organizations around the world grow and thrive. Dun & Bradstreet’s Data Cloud, which comprises of 455M+ records, fuels solutions and delivers insights that empower customers to grow revenue, increase margins, build stronger relationships, and help stay compliant – even in changing times.
Any project manager will tell you that starting out a new assignment or project can be exciting. It gives them a chance to learn and create something new. However, every project has its own set of challenges. One of them is managing the finances.
There is more to project finance management than just working on the numbers or a budget. There needs to be a clear balance between utilising the finances while ensuring success.
Before we go ahead, it is imperative to understand what is project finance management.
It is a process where one needs to plan, establish, secure, and then bifurcate and distribute the resources so that they are utilized optimally during the project time frame.
Project finance management is not just about securing the money and using it when the time comes. It involves various steps. Once the funds are secured, the process starts with planning, followed by distribution, monitoring whether the funds are optimally being used, and streamlining resources until the project is executed.
However, it is important that all the steps align with each other and the project goal. This can help in decision-making and the optimal use of funds.
There are multiple key components that one needs to follow for successful project finance management. This includes:
Only when these components work together can a project be managed on budget, financially viable, and executed on schedule. However, these components are not set in stone. There will also be constant monitoring, adjustments in various aspects, and adaptation to the situation required.
Every project has a lifecycle, and project finance management has four distinct phases.
This is the starting point. It should ideally focus on understanding and studying project feasibility, initial cost estimation, and funding. After laying the financial groundwork, project managers can decide whether a project is worth pursuing.
This phase involves creating a detailed budget. Financial planning will follow based on that budget. This is when various costs and risks are identified, and funding is secured. It also helps get an idea of whether the project can be completed within the set budget.
Execution will involve constant monitoring of expenses, managing cash flow, and ensuring proper utilisation of funds. Financial reporting also forms a part of this phase, as it helps maintain discipline and allows all the parties involved to stay abreast of the situation.
All financial transactions in any project need to be accounted for, and records must be reviewed and audited completely. The phase helps understand whether all the obligations of a project were met within budget and helps set a precedent for future projects.
Is project finance management really needed? In a word, yes.
It can help with cost control and optimising the available resources. Cash flow management and risk strategies can be implemented in the process. It also establishes transparency and accountability, as clear financial records need to be maintained.
Every project will need resources to be completed. Project finance management ensures that resources are first budgeted and then efficiently allocated. This can help minimise costs and maximise resources, avoiding resource wastage. It can also help create buffers to avoid setbacks and ensure smooth execution.
Every project always involves a certain percentage of risk, including financial risk. Project finance management can help mitigate them. One can manage cash flow and create risk-mitigating strategies so that there are enough financial resources to fulfil any unexpected needs at any point.
Project finance management can help create transparency. This can be done through meticulous record-keeping and providing the stakeholders with project updates. It can also help heighten confidence about the project and create accountability among the project members.
Project finance management can help in creating a disciplined approach to project finance. It can help with planning and execution. This can be done with the right kind of financial tools that can help at every stage of a project. It helps in creating foresight and can help wade through complex situations to ensure a project is completed successfully.
Understand how your customers are paying you versus others
Gain your stakeholders confidence for increased business opportunities and establish your brand credibility.
Make smart credit decisions faster, keep a watchful eye on accounts and monitor portfolio trends. Comprehensive, intuitive and dynamic.
Contact us