Finance Department

Apparel Industry Management 3(3+0)

Lesson 14 :Major Departments in an Apparel Industry

Finance Department

The finance department is responsible for managing all the financial administrative affairs of the company and has a very important influence on many of the policy and commercial decisions taken by management. The financing of a company’s operations require precise timely planning and control in order to ensure that adequate funds and credits are available when needed.

Apart from the money to pay suppliers, salaries, expenses, etc funds have to be on hand to finance stocks of raw materials and finished goods. In periods when trading is difficult and revenues are down, provision has to be made to cover such periods.
Some important functions performed by this department are:

  1. Providing management information
  2. Budgeting
  3. Garment costing
  4. Administration.
  1. Management Information:
    In the world of business, success or failure is ultimately measured by money and therefore it is essential that the financial pulse of the company is under continual measurement. This department is directly responsible for providing the management with up-to-date information on the current and future financial status. Some typical reports prepared for management are: balance sheets, stock levels and values, production costs, operating statements for different departments, cost rejects, returns etc.

  2. Budgeting:
    The object of budgeting is to plan and control the company’s activities so as to maximize profitability, and the starting point for all budgeting is the sales budget. This is usually drawn up before the beginning of each financial year or season considering the sales to be established and new customers, general economic trends at home and abroad, manufacturing capacity and availability of finance. Other budgets considered are: labour costs, material costs, overheads, and departmental budgets.

  3. Garment Costing:
    It is the ‘identity card’ of the garment and contains all the information required for the pre-production and production stages making garments. The costing sheet shows the detailed costs for:
    • Material,
    • Labour,
    • Fixed and variable overheads,
    • Other expenses.

    The information for garment costing comes from various sources: sample section, cutting room, break down time values and costs involved in cutting, sewing and finishing, costs of trims and materials, overhead costs from finance department.

  4. Administration:
    All the departments in a clothing industry require administrative support for their operations to ensure orderly and systematic functioning.
    The procedures covered are;
    • Preparing orders to supplies,
    • Checking goods inwards,
    • Timing and methods for stock taking,
    • Imports and exports,
    • Obtaining credits for returned goods and materials,
    • Issuing credits for customer returns,
    • Negotiating and issuing tenders for major projects,
    • Purchase of office furniture and equipment etc.

    A clothing business has ‘up-front’ departments such as design, marketing and production and the fact that they function smoothly is the result of good administrative support.

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Last modified: Thursday, 17 May 2012, 11:48 AM