The Financial Management main role is to plan, organise and govern all the financial activities of a company. It applies management ethics to the financial resources of a company. This practice controls all the economic operations of an enterprise like utilisation of funds, procurement of funds, payment, accounting, risk assessment and everything related to the cash.
Key Roles of Financial Management
Financial management governs all the financial activities of a company. A few key roles are mentioned below:
- Bookkeeping and Accounting: It is essential to identify, take appropriate measures and record all the financial details of a company. Whatever funds are debited or credited from a company’s account, the financial management efficient accounting system gives an overview. Also, the bookkeeping records the everyday transaction of a company and forms a base for the accounting system.
- Reporting: Most of the stakeholders depend on the organisation’s financial statement before making any decision. The finance team shares a financial report to its shareholders regularly. Depending on the report, the shareholder forecast on when to buy or sell the stock. So, the accuracy of the financial data is essential to make a decision.
- Receivables and Payables: Managing what your company owes to the vendors, and what the customer owes to the company is essential. It gives a clear view of how much liquid cash a company should have in all time.
- Investment Opportunities: The Financial report gives the opportunity to invest in the right stock and at the right time. Only after seeing the financial status, an organisation can leverage the correct openings.
- Risk: A robust financial management system is mandatory to maximise the profit and minimise the risk and liabilities. An efficient financial team should incorporate sufficient insurance to all the essential elements of a company.
Also Read:Scope of Financial Management
The above mentioned is the concept, that is elucidated in detail about ‘What is the role of Financial Management?’ for the Commerce students. To know more, stay tuned to BYJU’S.
FAQs
What is the role of Financial Management? The Financial Management main role is to plan, organise and govern all the financial activities of a company. It applies management ethics to the financial resources of a company.
What is the key role of financial management? ›
A crucial role of financial managers is in making financial decisions and exercising control over finances in the organization. They make use of techniques like ratio analysis, financial forecasting, profit and loss analysis, etc.
What are the key roles of a finance manager? ›
Key responsibilities of a finance manager
- Drive the continuous improvement of end-to-end accounting practices.
- Prepare and post monthly accruals, prepayments and similar accounting entries.
- Budgeting and forecasting.
- Leading the analysis of monthly and quarterly numbers and presenting findings to the board.
Finance roles are positions within a company that manages budgeting, accounting, predicting income and creating profit and loss statements. Budgeting and predicting sales are an important part of any business, meaning candidates with strong financial and analytical skills are always in demand.
What is the main goal of financial management? ›
Typically, the primary goal of financial management is profit maximization. Profit maximization is the process of assessing and utilizing available resources to their fullest potential to maximize profits. This has the greatest benefit for company shareholders hoping for the highest possible return on their investment.
What is the concept of financial management? ›
Financial Management is a study of planning, designing, directing and managing the economic activities such as the utilization of capital and acquisition of the firm. To put it in other words, it is applying general management standards to the financial resources of the firm.
What is nature of financial management? ›
Financial management is about making decisions, especially about risk and return on investment. The relationship between risk and return is important in financial management decisions. Generally, when an investment is riskier, it usually brings higher returns.
What are the 3 types of financial management decisions? ›
There are three primary types of financial decisions that financial managers must make: investment decisions, financing decisions, and dividend decisions.
What is a financial role model? ›
A financial role model is someone who can motivate you to make wise financial decisions and offer advice on how to handle your money well.
How many roles are there in finance? ›
The finance industry offers a wide range of job roles, including but not limited to Accountants, Auditors, Financial Analysts, Investment Bankers, Financial Planners, Risk Managers, Bank Tellers, Loan Officers, Insurance Underwriters, Tax Advisors, and Treasury Analysts.
These seven practical money management tips are here to help you take control of your finances.
- Make a budget. ...
- Track your spending. ...
- Save for retirement. ...
- Save for emergencies. ...
- Plan to pay off debt. ...
- Establish good credit habits. ...
- Monitor your credit.
Example of Financial management
The financial manager will first assess the company's financial position and determine how much funding is needed to support the expansion. They will then develop a budget that includes the costs associated with the expansion, such as new equipment and employee salaries.
What are the three objectives of financial management? ›
The objectives of financial management are as follows:
- Profit maximisation.
- Mobilisation of finance in a proper way.
- Ensuring the company's survival.
- Maintaining proper coordination with other departments.
- Lowering the cost of capital.
Below are 8 skills any finance manager worth their salt should seek to hone in order to advance their career:
- Strategic and analytical skills. ...
- Be tech-savvy. ...
- Adaptability. ...
- Honesty and strong values. ...
- Strong communication skills. ...
- Leadership skills. ...
- Industry-specific knowledge. ...
- Keep learning.
You Can Shape the Future of an Organization
As the manager of an organization's finances, you have considerable power to determine the organization's future. With smart management of cash and investments, you can set up a company for long-term success (and help its employees enjoy long-term success as well).
What are the primary responsibilities of the financial manager quizlet? ›
The role of financial management is to develop a tactical plan identifying short term objectives and strategies that enable finance to support the whole business in achieving its strategic goals. Objectives include profitability, growth, efficiency, liquidity and solvency.
