Business Environments
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PUBLIC SECTOR

In a public sector business, the business is only really accountable to it's financial provider and the banks. The business is run to ensure the funds given by its financial provider are fully utilised to pay suppliers and employees whilst providing a service to it's target customers. The business is accountable to the banks to ensure it has adequate cashflow.

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PRIVATE SECTOR

In the commercial world, organisations become strongly accountable to customers and suppliers, as they are the main locus for funds flowing in and out of the organisation.

INVESTORS: This will cover individuals/organisations who have invested funds in a business. All investors will want to be kept of how a business is performing.

SHORT-TERM LENDERS: These will mainly be banks who help the business finance itself over short-term periods, either by offering business overdrafts or by loans.

INLAND REVENUE: All UK businesses pay tax on profits generated, the current figure is about 40%. The inland revenue will wish to see the business accounts on a regular basis. If the business makes a turnover in excess of a certain figure (mid 20K range) then your business will have to start charging Value Added Tax VAT on everything it buys and sells.

CUSTOMERS AND SUPPLIERS: Close attention needs to be paid to ensure money flows into and out of the business correctly, in an ideal environment, your business will have to ensure money is being paid out of your business at a slower rate than it enters it.

EMPLOYEES: In terms of financial accounting, often the most neglected group. Employees provide the skills and knowledge by which a business operates, although they do not have any direct investment interests, their skills are vital to the business.

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