The importance of financial management can be assessed by taking a look at its core mandate: Through a streamlined financial management practice, it is possible to ensure that there are sufficient funds available for the company at any stage of its operations. The financial management of an organization determines the objectives, formulates the policies, lays out the procedures, implements the programmes, and allocates the budgets related to all financial activities of a business. Financial management professionals are also responsible for fund allocation in an optimized way to ensure greater financial stability and growth for the organization. They focus on sourcing the capital whether it is from the initial investment by the entrepreneur, debt financing, venture funding, public issue, or any other sources. Financial management professionals plan, organize, and control all transactions in a business. In simple terms, financial management is the business function that deals with investing the available financial resources in a way that greater business success and return-on-investment (ROI) is achieved. Let’s delve deeper into the world of financial management. Therefore, funds need to be managed, regulated as per procedures, and monitored at every step of the business lifecycle.Īny business that manages its finances better experiences exponential growth, and businesses that mismanage their financial resources and activities usually undergo losses or make lower profits. Further, a sufficient corpus of funds and efficient financial management is required throughout a business’s lifetime and even when a company is sold or wound up. Finance is one of the crucial prerequisites to start any business.
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