What is financial management & Importance of financial management

                              

 

Understand the concept that why a business need a finance & how to do financial management

These days everyone wants to start his/her business &  it requires the knowledge of the business, product which he/she wants to sell. But is it enough to start a business?  The answer is that finance is the back bone of any business whether its small business or big business. If a person has sufficient amount of finance is available then it will be easy to start a business.

Let us understand the term Finance

Finance is a French word adapted by English community in the 18^th century. For layman finance is just money but it not just money. Actually the finance means that how to manage the money. You can watch my you tube channel video. 

                                      

For start up a business, the financial management is most important. So first let’s understand what financial management is & why we need to understand the concept of the financial management. As human body requires a blood for living his/her life, similar the business requires finance for running the business. The product knowledge is very important for any business but if a businessman has no money or business man does not know how to manage the finance or money then it is impossible to start a business or to expand the business. Even it is very important for a business to know that how to arrange a finance for running a business or to expand the business. The answer of all these questions comes under the financial management.

In layman language, we can say that financial management includes these words i.e when, where, how & what. When money is required, where to invest or pay the money, what are the sources available of the finance & most important how to manage the finance or money for the business.

In the bookish language let us understand what is financial management:

Financial management refers to the powers involved in the management of financial assets. These skills are acquisition savings, effective financial management, capital planning, and organizational structure planning. It involves managing and maintaining the organisation's financial resources. In addition, it determines future systems identified by development, consolidation, integrated integration, and integration and acquisition.

At the beginning of a business, shareholders or investors will quickly deal with financial problems that require financial choice. Questions, for example, what resources to invest in and where to get the money needed for such assumptions may require financial expertise. Also, as the work prospers, investors need day-to-day financial management and stability in long-term financial choices. All of this undoubtedly requires something other than a little business knowledge. It requires knowledge in a completely different region the space for financial management.

  Financial management is the process of planning financial options for the specific purpose of boosting the wealth of investors. In the financial field, financial management is better known by various names such as business finance, corporate finance, and management finance.

 While the specific goal of financial management is clear to “increase the number of investors,” the approach that causes this overarching goal has been eliminated with other sub-objectives. Objectives such as day-to-day benefits and day-to-day financial management are largely regarded as short-term goals, and achieving these objectives has a background for passing financial management. Apart from this, further financial management handles other long-term pulling objectives, including business profitability and common sense.

 Achieving the goals of financial management, both long-term and current, includes a ton of cycles and exercise. These include management fees, financial risk to the board, financial retention, management retention, and others.

 At the moment, this can be seen as a huge number of activities, especially for financial professionals who are just looking at private companies. With so many elements of a financial management system accessible, however, maintaining these obligations can be relatively easy. On the other hand, financial managers can benefit from the management of a financial manager or refer to the guidelines of organizations that provide financial management.

 Why does an organization need a financial manager?

 Extensive planning requires a financial manager to direct business practices, deal with the preparation of financial reports and build and monetize management plans. Nowadays, every organization, whether large or small, has financial directors, and they stand firm in an important and memorable situation.

 Apart from that, the duties of a financial manager are flexible as indicated in the position, but part of the general function includes planning reports for the most part required by management professionals. They also play an important role in dealing with the readiness of financial statements, for example, financial records, pay definitions and audits of income or future expenditure. All of these reflect and determine the financial position of the organization. In many organizations, financial management is the key to controlling the maintenance and use of offices.

 Financial regulators also called financial experts or financial advisors use their business acumen, law enforcement, defense and land to determine financial options for people who rely on their current time and long-term goals for attracting. Considering job responsibilities and management considerations each company is looking for a competent representative who can guide their business in the right direction. From now on, to address the changing needs of graduates in financial management should be appropriate.

Financial planning and forecasting are especially important when it comes to money management and sales, because any failure of this will lead to the immediate demise of your business. You need to be constantly on the lookout for your immediate financial situation and make asses what needs to be done to meet those financial obligations.

Financial Management is not something you worry about only after the end of the year, when you need to report to a taxpayer. The process of understanding and tracking how your business is doing at least every month. Some businesses' need to be updated frequently depending on their size or how much the business needs it.

Differences in Accounting and finance:

Modern business management involves the process of converting information into actions and accounting is the source of a lot of financial information used for this purpose to achieve business objectives / objectives.

Accounting is the ability to record, edit and summarise, financially, transactions and events of a financial character. As a result of this close financial relationship with accounting, a new branch of accounting has already emerged under the heading Financial Accounting.

In the nutshell, we can say that Financial management is a process in which a small, medium and big business man manage its financial activities. Understanding of manage the source of the finance and art of spending the money into the business at right time and in right way

Also Read: The concept of cash flow statement, Income statement, Dividend, Net profit