Companies need to raise capital and utilize them efficiently to run the business and realize profits for the shareholders. The business, which engages in the manufacture of goods, requires funds to source the raw materials and transform them into products, sell them to customers, and collection of the sale proceeds in time. Careful movement of funds through this cycle requires a financial manager and opt for financial decisions.
Organizations and businesses need financial management to reach business targets and realize rich dividends. Hence, it is essential for the following:
- Financial planning
- Sourcing and managing the finances
- Allocation of funds
- Helps in important financial decision making
- Controls financial costs
- Improves organization value and profitability
- Helps in future growth and maintains economic stability
You can approach Joseph Stone Capital for help in efficiently managing your company’s finances and reap rich dividends in the short to medium term.
Objectives
Financial Management objectives include mobilization of funds, utilization of funds efficiently, proper financial controls, reducing the risks, and improving the business survival. The main objective of any business is to maximize profits in the short, medium, and long terms. It is the top priority for any finance manager in your organization.
Proper management of finances is essential for any organization to thrive and boost profits. The role of the finance manager is vital to properly allocate the funds after evaluating the proposals and foreseeing the risks rather than spending all of the capital at hand in one go.
The finance manager is responsible for allocating funds to all the departments efficiently considering the necessity and work involved. It should play an essential role in enhancing the profitability of your organization.
Running a business consists of a lot of risks. The finance manager should evaluate the complex situations, make the right decisions in allocating the funds to riskier assets, and set aside certain funds to manage the critical situations. Financial managers can seek the advice of experts and subject matter professionals at Joseph Stone Capital in such complex situations.
Survival
The role of the finance manager is to ensure the survival of the business even in difficult situations like the recent shutdown caused by the spread of coronavirus, strikes, and other unavoidable situations. Expert advice can be sought to overcome difficult situations.
Key elements
The basic elements of financial management are Financial Planning, Financial Control, and Financial Decision Making. In financial planning, the finance manager needs to estimate the capital required for the organization considering the factors: the long-term plan, established business targets and objectives, funds necessary to sustain the business, and the regulations and policies governing the business.
Improving the awareness of business targets and financial goals to every employee engaged in the decision-making is essential to achieve success. It also involves proper managing of the funds to meet business targets rather than focusing on cost-cutting measures itself. Understanding the financial aspects and a proper plan is essential for resource allocations, funding, and profit distributions.
Preparation of the budget
The financial manager needs to collect the budget for the financial year for business targets, fund requirements, and expenses for working needs, running day-to-day operations, marketing, product developments, and interests on the borrowed funds, litigations, etc. The management will debate on the budget and decide on how to source funds for the business. Various avenues for funds include debt, equity, and private capital.
