The Importance of efficient financial management

Managing the finance of any corporate venture is critical to its survival in the economic scene of today. Efficient finance management requires adequate planning, scheduling, and orchestration of the financial activities of an enterprise. From sourcing and utilization of funds to execution of projects, effective financial management employs proven managerial techniques to guarantee maximum productivity of all commercial operations of an organization. All these are necessary to ensure optimal returns and prevent any case of insolvency or bankruptcy.

Financial management entails overseeing all the assets, liabilities and investments of the organization in question. A financial manager is tasked with the responsibility of monitoring the daily financial items like accounts, the company’s profitability, revenue, expenditure and cash flow. The information derived from all these elements is critical to the analysis, evaluation, and creation of a blueprint needed in the dynamic steering of such organization to market relevance.

A pivotal aspect of efficient financial management is deciding which short term goals and investments need to be let go to facilitate achievement of the long-term objectives of the organization which is more important. For instance, in times depression or economic decline, the best policy might involve foreclosing surplus facilities and cutting down on staff numbers; a decision of this sort might have an adverse impact on the both the short term profits and brand image of the company. However, they are necessary to keep the company afloat in view of the future long-term goals.

The Rudiments of Financial Management

The effectiveness of financial management utilized in the execution of key practices with regards to the finance of the company. These methods ensure that the corporation’s financial resources are utilized in the most efficient of ways to yield best possible results. These practices which include risk management, budgeting, assessment and appraisal are critical to the financial upliftment of any organization.

• Risk Management

An assessment of the financial exposure consequent of investments, capital expenditure and the general policy of an organization is a crucial aspect of financial management. This is so because certain undertakings have the potential to cripple the financial standing of an organization, determining whether an investment or expenditure is risky and the decision to shun such constitutes efficient fiscal management.

• Budgeting

Planning and budgeting are essential for the sustenance and viability for any company. Advertent budgeting of (scarce) resources ensures that finance is not overspent on one venture at the detriment of the other. For a financial manager to achieve this feat of in-depth budgeting, it is imperative that he/she has the

requisite oracle fusion financial training needed in the usage of finance modules, since the process of budgeting can be a tad bit repetitive and cumbersome. Budgeting is essential to facilitate the smooth running of an organization, as it allows for adequate liquidity to undertake daily expenditure and expenses. It gives a fiscal overview of the general performance of the various segments of the company; helping to determine which aspects of the company exceed the confines of their budget.

• Assessment

Another core practice of financial management is the resources assessment and subsequent evaluation of all financial sectors of an organization. Assessment and appraisal help in pinpointing deadweight in the organization. Certain aspects of the company may not be yielding dividends commensurate with the resources expended, periodic evaluation function to single out such areas.

In the end, the primal goal of a financial manager is ensuring the survival and in extension profitability of his corporation. To achieve this, the manager must be versatile in undertaking the highlighted roles and also be abreast with current best practices in the business world. Only then is the future growth of the company assured.