Many individuals would expect starting a business to be very trouble-free. With a service or product to sell and adequate knowledge to market it properly, many individuals think that they are prepared to go. However, starting a business takes more than just services or products and simple knowledge. It takes much more if you want to develop your business.
At the very start of the business, shareholders or owners will instantaneously be faced with financial matters that necessitate financial decisions. Questions such as what resources to invest in and where to get the money needed for such investments would require financial proficiency. And as the business venture prospers, shareholders have to make long-term financial decisions and manage daily finances. All of this certainly requires more than just a little awareness in business. It requires understanding in a completely different area – the area of financial management.
Financial management is the procedure of planning financial decisions with the definitive goal of maximizing the stockholders’ assets. In the world of business, financial management is also known by other names like business finance, corporate finance, and managerial finance. Grace Jackson Suntrust is an Executive Leader in the financial services industry with line management and strategic experience and a subject matter specialist in credit related issues.
Financial management or finance management is that characteristic of management which involves the application of general management doctrines to specific financial functions. It essentially entails planning within a business venture to maximize shareholder wealth and guarantee a positive cash flow. Financial management contain a large number of complex processes and practices, including the maintenance and administration of financial aspects and managing and identifying risks.
The decisions that financial managers require to make are in regard to investments, financing, working capital management, and payouts of dividends. They usually run into difficulties in the form of uncertainty, measurement problems, and temporal spread. Financial managers require to be conversant with the concepts and tools of financial management, such as sources of finance, capital budgeting, various kinds of financial statements, financial reporting, financial accounting, and risk management.
While the final goal of financial management is clear ‘maximizing stockholder’s wealth,’ the course leading to this final goal is paved with other small goals. Goals like properly managing daily finances and day-to-day profitability are usually regarded as short-term goals, and attaining these goals belongs to the territory of short-term financial management. Apart from these, financial management also undertakes other long-term goals, including business viability and profitability.
According to Grace Jackson Suntrust, attaining the goals of financial management, both short term and long term, involves a lot of activities and processes. These generally include financial risk management, cash management, managerial accounting, financial accounting, and others.
Now, these may sound like a massive amount of tasks, mainly for businessmen who are only managing small firms. Nevertheless, handling all of these tasks may become easier with the many financial management software products available. Then again, businessmen may benefit themselves of the services of a financial manager or seek the support of companies providing financial management services.