Financial Management

What is Financial Management?
Financial management involves the use of financial statements which reflect the condition of your business and will identify your strengths and weaknesses. It will enable you to plan using projections that will commit you to a more effective use of capital, assets and personnel which will maximise the return from your business.
" Focusing on planning is essential to survival ..."

Financial management involves all the activities that will enable a business to obtain capital for growth and allocate resources more efficiently. It will maximise the potential of your business and enable results to be monitored through the use of accounting systems and documentation.

This type of management will require a well written, comprehensive financial management plan which outlines the assets that the business owns, the debt it owes and the future profit potential.

Financial Management is Critical
Studies overwhelmingly identify bad management as the leading cause of business failure. Bad management translates to poor planning by management.

All too often, the owner is so caught up in the day-to-day tasks of getting the product out the door and struggling to collect receivables to meet the payroll that he or she does not plan. There never seems to be time to prepare Budgets.

Often new managers understand their products but not the financial statements or the bookkeeping records, which they feel are for the benefit of the Tax Department  or the bank. Such overburdened owner/managers can scarcely identify what will affect their businesses next week, let alone over the coming months and years.

Success may be ensured only by focusing on all factors affecting a business's performance. Focusing on planning is essential to survival.

Financial Management is generally concerned with profit planning or budgeting.

These involve - Projected Income Statements, Cash Flow Statements and Budgets, Ratio Analysis, and pricing considerations. The business's financial management information should be prepared on a monthly basis for a year into the future.