Financial management means planning, organizing, directing and controlling financial activities, such as the acquisition and use of company funds. It means applying general management principles to the company's financial resources. In a competitive world, company survival is a primary objective. Darwin said: “Survival of the fittest in biology, which is applicable to companies.
Companies need to make decisions intuitively. They can always call on the help of expert consultants if necessary. The functions of financial management are the functions performed by a financial manager in an organization. Therefore, it includes overseeing finances, planning budgets and achieving financial goals.
Here are five fundamental functions of financial management. Financial management is the strategic planning, organization, direction and control of the financial entities of an organization or institute. It also includes the application of management principles to an organization's financial assets, while playing an important role in fiscal management. Just as you don't waste all your savings all at once to buy something without having anything on hand, managing funds is crucial for any company.
Now that you have a clear idea of financial management, let's look at an example of financial management. Financial management is vital for companies and organizations, as it sets the right path for achieving business goals and objectives. By understanding the functions of financial management and how they are applied in practice, you can improve your financial management skills and maximize profits. Financial management is associated with the effective management of an organization's financial resources.
Therefore, the scope of financial management extends to activities such as budgeting, financial planning, financial analysis, financial forecasting, financial reporting and risk management. A financial plan is usually drawn up annually based on the company's budget and financial projections. As part of financial planning, financial managers first analyze the cash flow statement, balance sheets, and financial investment statements. The financial manager must allocate funds to profitable companies or make investments that generate reasonable returns with certainty on the investment made.
To run a company efficiently and effectively and achieve business objectives, it is necessary to have a good knowledge and understanding of financial accounting and management. Once you have an adequate plan and understand all financial aspects, decision makers should access and decide on funding, resource allocation, benefit distribution, and many more. Financial planning is a way of calculating the capital required by an organization and properly allocating resources accordingly.
