The importance of finance in a business can not be emphasized enough. Business
managers and owners use financial data everyday within the operation of their
businesses. Finance is used to analyze the present and project the future. Companies can
not operate without the benefits of financial analysis.
Financial management is the practice of strategizing, directing, organizing, and controlling
financial events and resources within an organization. Financial management helps attain
better allotment and acquisition of financial resources and guides investment decision.
Activities that aid financial managers are as follows but not limited to: Financial
statement analysis, Estimate the financial impact of projects and initiatives, Prepare and
implement a working budget, Team decision making based on sound financial data, and
Tracking financial performance.
Financial managers have many tools in their bag when it comes to managing the
companies assests. Among those are Accounting systems, Expense tracking, Budgeting
tools, payroll management, Easy billing and invoice tracking, Inventory tracking, and last
but by no means least - Tax preparation.
I have developed a family accounting system based around quicken software that I have
used for quite sometime to help collate bills, pay said, track budgeted expenses an
income as well as assimlate data for year end tax reporting. Not only is this system
helpful in my spending trackage but it also is a must for my investments and tracking
their performance.
The purpose of finance within a business is to allow both companies and individuals to
fund projects for today, to be paid in the future based on income generated from
borrowing and lending, investing, selling and trading capital and of course raising capital.
Accounting can be thought of as a way to keep score of a business's activities. There is
hardly ever a business decision made without first checking the financials.
A few activities that involve financial management are producing an accurate financial
report, monitoring the fixed and current sides of the balance sheet, observing the
performance of investments and of course advising on matters of compliance with
regards to financial regulations and planning for the dreaded taxes.
As an accounts payable specialist, I use tools to monitor the incoming and outgoing
balances to make sure we always have bills covered. Recently one of our sister
companies had to shut the doors after trying to survive the lockdowns, crazy inflation
and let's not even get started on oil regulations, it got to a point that they were drowning
more and more so shutting down and selling off is the only option to hopefully
breakeven at least. Financial management oversees many operations. Both the controller
reporter and treasurer report to the Chief Financial Officer. The financial manager will
over see dad to day operations. This will include making financial decisions and collecting
data to make decisions daily.
They will make decisions about getting and spending money received from investors too.
A financial manager may be involved in international affairs. This could have them
dealing with exchange rate changes, changes in laws, or dealing with the risk that may be
involved. They may handle business assets as well. They may include stocks, bonds and
properties.One of the tools a financial manager may use is the TVM (time value of
money). This will analyze risk and timing of cash flows. They may also use liquidity
rations to keep track of assets and liabilities. Then another is profitability ratios. They can
use this to track the gross profit margin. I have used Quickbooks to track assets and
gross profit margin. I found it very interesting how it can even calculate depreciations of
items for you. The role of finance in business is an important one. There are many
different parts of finance in management, and they are all equally important. Some of
the roles in finance in business include:
· c c c c c Accounting/Bookkeeping
· c c c c c Reporting
· c c c c c Accounts payable/receivable
· c c c c c Investments
· c c c c c Risk management
There are many different tools that financial managers use to monitor/access the health
and performance of a business, and usually companies use their choice of programs that
works best for them. For example, I was an assistant manager at an apartment complex,
and the program we used was called QuickBooks. It had all the different programs all in
one and made it easy to access and navigate the finances of the company. It had
accounts payable/receivable, which was the outside companies we used for lawn and
pool maintenance, stores, etc. It also was easy to enter and edit the tenant names and
information, and even enter payments and process payroll. While there are many
financial programs that companies can choose from to best suit their needs, sometimes
they may even create their own, that can be even more beneficial to them. QuickBooks is
a great program and tool for business finances. I have found it to be a great program to
utilize for budgeting. Many companies have started using QuickBook for fiance
management. I have also used this program for financial management of my own
business and find it to be very good to handle all business financial needs.Finance is a
critical component in just about every aspect of a business and allows companies to
make grounded decisions regarding planning, budgeting, risks, cash flow, etc. Finance
guides both long-term strategic decisions and everyday decisions that businesses need to
make. Financial management is the process of managing a company's finances through
organizing and controlling financial activities that will benefit the company. Financial
management includes activities such as managing cash and credit, spending capital,
hedging and investing. Finance managers use financial statements to access and/or
monitor the health and performance of a business. Income statements, balance sheets,
and cash flow statements all provide finance managers with the information they need to
help business make important financial decisions. Finance managers also use a number
of different ratios to help gain insight on different aspects of financial performance,
including asset management ratios, debt management ratios, etc. While I haven't used
any of these tools personally, I've had to work with the finance mangers within my
current organization to get expenses/projects approved. A lot of times, we're required to
provide finance managers with many pieces of information, in order to move forward
with a purchase of a good or service.
