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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:
· e e e e e Accounting/Bookkeeping
· e e e e e Reporting
· e e e e e Accounts payable/receivable
· e e e e e Investments
· e e e e e 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.
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