The technological advancement has not only shaped the technical, mechanical and electrical markets and innovations, but also the ways of handling the financial problems of any organization, sector, or market. Now the term engineering is not merely attached to technical things, but with financial as well. Financial engineering is a very popular term and very tough to take a hold on. Financial Engineering is actually using the technical aids in the form of mathematical techniques, statistics, computer science etc. to produce applicable, innovative and reliable solution for financial problems. Investment banks and other organization that somewhere deal with finance use financial engineering/quantitative analysis as regular users.
Increase in number, variety and complexity level of financial problems gave rise to the need of - Financial Re- engineering. As the name suggests, Financial Re Engineering is basically the redesigning the process and structure of a business or organization to stimulate the saturated financial growth positively and reduce the production cost or other cost effectively.
Financial Re-engineering can also be termed as:
Financial Restructuring:
Rebuilding or re constructing the financial structure can be considered as financial restructuring. It is very important to enhance the financial performance of any financial structure.
Corporate Restructuring:
It is all about restructuring the existing plans, policies, process and people in order to set the new benchmarks or achieve a defined set of goals and that too on a sustainable basis.
However, to achieve the best targets while implementing Re- Engineering, it is very important to take care of the following points:
Increase in number, variety and complexity level of financial problems gave rise to the need of - Financial Re- engineering. As the name suggests, Financial Re Engineering is basically the redesigning the process and structure of a business or organization to stimulate the saturated financial growth positively and reduce the production cost or other cost effectively.
Financial Re-engineering can also be termed as:
Financial Restructuring:
Rebuilding or re constructing the financial structure can be considered as financial restructuring. It is very important to enhance the financial performance of any financial structure.
Corporate Restructuring:
It is all about restructuring the existing plans, policies, process and people in order to set the new benchmarks or achieve a defined set of goals and that too on a sustainable basis.
However, to achieve the best targets while implementing Re- Engineering, it is very important to take care of the following points:
- It is very important to focus on the organization of results, instead of tasks
- Once you think of opting for Financial Re Engineering it is very important to first identifying and prioritizing the processes of your organization. Then on the basis of the urgency it should be implemented for those processes.
- When it comes about resources, it is must to control and use them properly, even when these are dispersed, geographically. Treat geographically dispersed resources as though they were centralized.
- Apart from integrated results of different activities, these must go parallel
- Above all proper control and management of every plan and activity is very crucial to implement Financial re Engineering.
Reasons that promulgate Financial Re-engineering can be many, to mention a few:
- Increased level of external competition for an organization in the market
- Either large companies lose market share or expand their market share there would be a sure shot change in the market share of small companies. In other words in case of erosion of market share Financial Re engineering becomes must.
- When there is increased number of market opportunities.
- Continuous Poor financial performance of an organization
- There can be different reasons that require and demand the re-cementing of the financial structure or process structure of an organization in order to enhance the financial performance and efficiency.
Financial Re-engineering possesses a set of objectives, which can be:
- To enhance the productivity and veracity of the existing data capture
- To reinforce the new framework for the budget of the company
- To reduce the cost and delivery cycle for any process
- To formulate an altogether new team to perform a specific process
- To innovate and introduce the financial structures that facilitates the future project costing.
- To organize around the different processes for better performance
- To eliminate or minimize the number of teams for a process.
- To create product and service opportunities by understanding the needs of customers in a better way and creating better standards for the products.
In this way Financial Re-engineering eases the analysis and access benefit and piques better decision making for a continuous financial improvement along with a sound risk management. It minimizes the resources` consumption, envisions new strategies for accomplishing processes and ensures maximum customer value.
