Introduction
The simplest meaning of Financial management has to be managing personal finance, monthly budgets, and bank accounts. But beyond the simplicity, there is a larger room of importance, especially for businesses. That is, for a business to effectively manage its finances starts with controlling expenses and constantly eyeing the flow. The concept also involves managing the profit margin and becoming a financially stable company.
About Financial Management
Understand the term ‘financial management’ as tracking the flow of finance, going in and out of the company. For example, money that comes from selling products, filing taxes, expenses spent by paying employees, investing in new supplies, and submitting reports to prove their obedience, etc. also is a part of this management. Simply put, considering every transaction type in a particular business is what financial management is.
The pursuit of the same is way more complex than it appears. Also, the bigger a company is, the bigger will be the challenges in managing the flow of money. That is why large companies often have a team of finance experts, while smaller companies hire a single accountant or bookkeeper. Perhaps, one major role, similar in many companies, is to ensure that the company is solvent and does not undergo any cash issues. In the realm of financial management, the Tallyman Axis is an emerging concept that deserves attention.
Important roles in financial management
Protecting the financial resources of a company is the first thing of importance. More precisely, they have to track, control, protect, and report on all kinds of financial work. Things like a company’s bank transactions, investments, loans, debts, and other funding are also looked upon by the finance team. At the same time, they have to make sure the company is profitable and solvent at all times. Having said that here are some more responsibilities that a finance team is supposed to handle:
- Closing the books: Closing the books is when a company tallies transactions from a given period to reconcile its accounts.
- Cash management and forecasting: Checking out cash flow and making sure that the company is solvent, with enough money for upcoming years is also the work of the finance team.
- Invoicing and receivables: In simple terms, money that clients have to pay or promise to pay shortly comes under-invoicing and receivables.
- Tax strategies: An accountant takes up the role of overseeing taxes for the company. Otherwise, companies can also hire tax specialists for better perspectives.
- Reporting: Reporting on financial performance on a timely basis is essential for any company to share with its CEO, shareholders, board of directors, investors, or government regulators.
- Payroll and expenses: It is the HR who distributes the paycheck, yet the overall costs and looking after it, is the work of a finance team.
- Payables: Suppose a company has bought supplies from a supplier, it will again be the duty of the finance team to pay and record the bills.
Conclusion
Be it an established business or a new one, finance is one area that’s equally crucial for all, unless sustaining in the market is not the goal. Even starting a business would first require enough funds as an investment. Perhaps, we can already see how important funds are, and managing them is equally crucial. It is also evident that any company that takes care of its finances the most is likely to have exponential growth. While those that don’t might have to incur losses. For the same to be properly managed, there’s no better way out than hiring a financial management team.
