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FINANCIAL MANAGEMENT – A TOOL TO GUARANTEE LONG TERM COMMERCIAL SUCCESS

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Abstract:

In recent years, Australian Water businesses have been subject to far greater commercial scrutiny than ever before. This emphasis on economic efficiency comes as a result of increased pressure on Australian industry to remain competitive in a global economy and the subsequent need for the inputs into industry (including water services, electricity, transport and telecommunications) to be provided at their most cost efficient levels.

The challenge for these Water Service Providers (WSPs) has been to develop a greater understanding on how the business may strike a workable balance between the new commercial emphasis and traditional role of managing social and environmental objectives.

This paper provides an outline of the management processes and tools, which have been used to assess the long-term viability of Water businesses. These tools have been successfully used in Queensland, Australia to ensure that water service businesses can meet these objectives in respect to:



funding of infrastructure investment (capital works) and recurrent expenditure to meet desired customer service standards


meet regulatory requirements


meet financial obligations to owners/shareholders; and


assess the impact of potential risks to the business.


The objectives of this paper are to “de-mystify” the Financial Management process and illustrate the importance of good financial management in ensuring that:



The business remains viable in the short term (i.e. sufficient cash) AND the long term (funding asset renewal).


Customers get value for money


Statutory obligations are met; and


Managers have sufficient financial information to manage the business more efficiently over the short and long terms

Document Type: Research Article

DOI: https://doi.org/10.2175/193864704784342163

Publication date: 2004-01-01

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