Financial management is extremely important for an organization. In order to achieve the organizational objectives and goals, it’s vital that they have a strong financial management system. Financial management is theprocess of monitoring, controlling, organizing and planning the financial resources. It controls the financial activities in a firm like, risk assessment, payments, accounting, utilization and procurement of funds, and every other money related things.
Since the era has digitized in 2019, with several businesses emerging, it’s necessary for them to manage their finances well for their long term sustainability. It’s important to have strong financial management to provide economic stability, increase the overall firm’s value, improve their profitability, assist in financial decision making, effective allocation of funds and a sustainable financial planning.
Proper management of firm’s finances provides fuel to it while ensuring efficient functions at the same time. They firm may expect to deal with several barriers and shortcomings, if their finances are not managed well. It could further effect their growth and development.
Financial Management ensures supply of funds in the firm, creation of safe and riskless opportunities of investment, utilization of funds optimally, and ensuring good returns to the shareholders. It also involves the financial planning of the firm including the amount of capital required, capital structure and organization, andframing of financial regulations and policies of the firm.
Almost all the firms in 2019 have a separate financial management department looking after financial affairs. They are aware of the fact that due to intense competition in this digitized era, it’s easy to lag behind the competitors due to poor financial management.
Financial Management department has numerous functions including:
- Financial control: Planning, organizing and obtaining of funds along with analyzing the long and short term finances.
- Efficient money management: Effective management of money to cater the financial needs such as purchase of inventory, meeting liabilities,maintaining stock, paying bills and salaries.
- Profit allocation: The division of net profit fairly, tokeep a part for the firm for its innovation and expansion while distribution of rest as dividends.
- Capital structure formation: Analysis of Debt-Equity for long and short term while considering the amount that needs to be raised through external sources.
- Calculation of required capital: calculation of the required funds as per the policies of expected profits and expenses.
Study of financial management in 2019 has its perks attached. It has diverse career opportunities opening job openings like credit analyst, investor relation executive, budget analyst, personal financial planner, financial manager, financial examiner, financial analyst, financial advisor, investment banker and corporate manager.
Furthermore, studying financial management will also help those who starting their own business. It improves interpersonal skills and help develop better teamwork and communication skills. It also has great job prospects, according to USA’s BLS the demand for financial management career has increased 14% while financial analysis and financial advising has increased by 23% and 32% respectively. They are offered higher salary packages and sustainable career growth and job security. (LSBF Blog Staff, 2018)