The Financial Manager and Concept of Financial Management
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Today I'll like us to consider a very key aspect in every corporation, company and/or business whether small sized or large sized in nature. This aspect is the financial part of a business. Money is key for business success and in fact every business revolves and is center on making money (profits). So, we can't talk of business without mentioning money, impossible. Finance which is the ability to purchase things is used by a business in its operations just as much as are, say, labour and materials and it needs management.
This money we are talking about can make a business flourish and it can also make a business crash. Meaning that money has its advantages but when misused, a corporation or company could sink to the very bottom. This then makes financial management of utmost necessity. As a result, there is need to have a financial manager, one who has in-depth knowledge on how to maximize and control funds.
The function of the financial manager would then be to manage finances adequately for the purpose of maximizing it. But we should note that the financial manager is one member of an overall management team. His activity not an individual one but is a contribution to the total management effort and must, therefore, be coordinated properly with other contributions.
Financial management has the implied function of planning and control. Thus, in management, objectives must always be set up and how to achieve them carefully planned as well. Also, management must control the resources used and the situation I which they operate so as to implement its plan. This is why the role of a financial manager should always be assigned to an expert and not just any kind of person. Money in a wrong hand will only end up wasted.
In designing the techniques of financial management, certain objectives are frequently assumed but it must not be forgotten that a technique cannot determine an objective and if the objective changes, then different techniques may become appropriate. This takes us to management objectives..
The most commonly presumed management objective is the maximization of the value of the company or firm. Maximizing a firm's value simply entails maximizing profit relative to investment. Sounds simple right? But it is not as simple as stated. Value maximization takes a process and requires a lot of work too. For example, building up customer goodwill. Then again, the maximization of profit requires that profit can be both defined and measured accurately and that all factors contributing to it are known and can be taken into account.
Although financial management is a unique subject matter with its own rights, a good financial manager will still need a knowledge of other subjects in order to fulfill his duties properly and profitabilly.
Financial Management has numerous functions and advantages but the specific functions of a financial manager are to ensure that funds are:
- readily available at the right time
- made available for the right length of time
- obtained at the lowest cost
- most importantly, used in the right way.
Final Thoughts Are you a business owner? Ensure that you manage your funds properly and if you cannot, you could always employ an expert. This is would help grow
