Financial management is the managerial activity which is concerned with planning and controlling of the firm’s financial resources. In other words, it is concerned with acquiring, financing and managing assets to accomplish the overall goal of a business enterprise, mainly to maximize the shareholder's wealth.
Some experts have mentioned financial management as the science of money management. There are two basic aspects of financial management, viz, procurement of funds and effective use of these funds to achieve business objectives.
Financial management is closely related to accounting. In most firms, both areas are the responsibility of the CFO. But the accountant’s main function is to collect and present financial data of the past, present and future operations of the organization. Financial managers use financial statements and other information prepared by accountants to make financial decisions.
Financial managers focus on cash flows, the inflows and outflows of cash. They plan and monitor the firm’s cash flows to ensure that cash is available when needed. The finance managers use this data for financial decision making.
What is the Role of a Finance Manager in an organization?
Proper financial management is key to successful business operations. Without proper administration of finance, no business enterprise can reach its full potentials for growth and success. Here is the importance of an efficient Finance Manager in an organization. The finance manager of an organization plays an important role in achieving the Company’s goals, policies and financial success. His responsibilities include:
Today, the role of a finance manager is no longer confined to accounting, financial reporting and risk management. It is about being a strategic business partner of a CEO of the Company. Below are the some of the functions performed by a finance manager.
For its day to the day decision-making process, financial management also draws on other related disciplines such as marketing, production and quantitative methods apart from accounting. For instance, the finance managers should consider the impact of new product development and marketing area since their plans will require capital outflows and have an impact on the projected cash flows. Likewise, changes in the production process may require capital expenditures which the financial managers must evaluate and finance. The Finance Manager is concerned with maintaining the solvency of the organization by providing the cashflows necessary to satisfy its obligations and acquiring and financing the assets needed to achieve the goals of the organization.
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