Financial Management Concept
Financial management is one of the traditional management functional areas found in any organization and to which belong the analyses, decisions and performances related with the financial means needed for the organizations’ activity. By this the financial role includes all of the tasks connected with obtainment, use and control of financial resources as a way to guarantee, on one side, the stability of the organizations’ operations and, on the other side the profitability.
Financial management goals: The large actions goals and financial management’s decisions can be synthesized as follows:
- Assure the company a balanced financial structure and that doesn´t place the organization in financial risk neither at short or long term. This balance can be measured by the comparison between the capital applications made and the sources of such capitals.
- Assure the profitability of the capitals invested (either own capitals, or outside capitals). This profitability can be verified comparing the value of the results obtained with the values of the own capitals invested.
- Guarantee the stability of the organizations’ operations assuring the existence of the financial capitals necessary either for the current activity, either for the achievement of investments in capital assets.
Activities integrated in the financial duty: In a brief statement can be integrated the following activities in the financial role:
- The determination of the financial resources needs (planning of the financial resources needs, inventory of the resources available, prediction of released funds and the calculation of external financial needs). This kind of activity is generally designated by treasury management.
- The achievement of funding (to finance the current activity or to finance investments) in the most benefic way taking into account the purpose of the funding, the costs, deadlines and other contractual conditions, tax conditions, the impact of the company’s financial structure, among others. To this activity can be given the designation of funding sources analyses.
- The insightful application of the financial resources, including the treasury excess, as a way to obtain a balanced financial structure and adequate levels of efficiency and profitability. The main variables to take into account in the application of financial resources should be the potential return of that application, its liquidity level and the associated risk.
- Economical and financial analyses, including the gathering of information and its’ study as a way to obtain safe answers about the company’s economical and financial situation.
- The economical and financial viability analyses of investments, as a way to support the decisions about its execution.
Besides the mentioned activities, can still be considered as an integral part of the financial role activities of more administrative scope such as accountancy activities, clients´ account management, suppliers and other debtors and creditors, invoicing management, among others.