Financial management definition
” Financial management means managing the invested money. It entails planning for the future of a person or business enterprise to ensure a positive cash flow. It covers the process of managing and identifying risks. It involved planning ,directing, monitoring, organizing and controlling the income and cash flow “
There process of financial management including
a) Financial Planning
– It is important to planning as management need to ensure that enough funding available. It is required for significant additions to the productive capacity of the business or to make acquisitions.
b) Financial Control
– Controlling is important to help that your finance is meeting its objective. Financial control must including about asset being used, secure assets
c) Financial Decision -making
– Decision making or implementation need to relate with the major decision such as financing, investing and dividends.
Financial management objective
What is financial management objective? It is important to know the objective before you manage finance especially your expenses and income. The objective to manage finance is to make profit, wealth and return maximization. It is important to achieve the financial management target because it will effect on decision market.
Financial Management System
In this modern area, we need to have methodology and software to oversee and govern our income, expenses and assets. Using software system will make our management is more systhematic.Features of good financial management system include
– Keeping all payments and receivables transparent.
– Amortizing prepaid expenses.
– Depreciating assets according to accepted schedules.
– Keeping track of liabilities.
– Coordinating income statements, expense statements, and balance sheets.
– Balancing multiple bank accounts.
– Ensuring data integrity and security.
– Keeping all records up to date.
– Maintaining a complete and accurate audit trail.
– Minimizing overall paperwork.
The Financial management is important even though you’re not a financial manager. Using the knowledge of finance will make you an educated consumer who will make decisions based on the actual factors involved.