Why financial management is important

There are many important factors for every business success but Financial management is one of the most important aspects in all businesses. To ensure the success of your business, you will need excellent knowledge in financial management. So we’ll talk briefly in next lines about this form of management and its importance?

Content

  • Financial Management Definition
  • Involved objectives of Financial Management
  • Functions of The financial management department
  • What is the importance of Financial Management?
  • How to be financial manager with Optimus?

Financial Management Definition

In any organization Financial Management is considered as an activity field. It refers to

  • organizing
  • controlling
  • planning
  • monitoring

processes of financial resources in order to achieve organizational goals and objectives.

Financial Management is control financial activities of any organization like funds procurement, funds utilization, payments, accounting, risk assessment and everything related to money.

Involved objectives of Financial Management:

  • Maintain an adequate supply of funds for the organization
  • Ensuring that the shareholders of the organization will get good returns on their investment.
  • Ideal and efficient utilization of funds
  • Approaching real and safe investment opportunities.

Financial management is consisting of some certain elements. including:

  • Financial planning

This is the process refers to calculating the capital required by an organization and then determining its allocations.

Financial plan includes specific key objectives, which is:

  • Determining the amount of required capital
  • Determining the organization and the structure of the capital.
  • Framing the regulations and policies of organization’s financial.
  • Financial control:

Financial control is one of the key activities in financial management. The main role of it is to assess whether an organization is achieving its objectives or not.

Financial control should answer these following questions:

  • Are the organization’s assets is used efficiently?
  • Are the organization’s assets safe and secure?
  • Is the management considering in the financial interests of the organization and stakeholders?
  • Financial decision-making

 Investment and Financing of the organization is involved to this element. This element is responsible of taking the decisions about how the organization should raise finance, whether they should distribute new shares, and how to distribute the profit.

Functions of The financial management department

Financial Manager is the one who responsible of The financial management department of any firm.

This department has its own Functions, Such as:

  • Calculating all the capital required:

By calculating the amount of funds that the organization requires. This depends on the policies of the institution concerning the expected expenses and profits.

Required amount estimation of Funds has to be in such a way that the earning capability of the organization increases.

  • Formation of capital structure:

After determining the amount of capital the firm requires, a capital structure needs to be formed. This depends upon capital amount that the firm owns, and that needs to be raised via external sources.

  • Capital Investment:

 Every organization is seeking to invest money to raise more capital and gain regular returns. For that, the financial manager resort to invest the organization’s funds in safe and profitable ventures.

  • Allocation of profits:

After earning a good amount of net profit, it is the financial managers have to efficiently allocate it. This could involve keeping a part of the net profit for Emergency, innovation, or expansion purposes.

  • Effective money management:

This department is responsible for the effectively management of the firm’s money. This money is very important for various purposes in the firm such as payment of salaries and bills, keeping stock, meeting needs, and purchasing any materials or equipment.

  • Financial control:

One of financial manager missions besides planning, organizing, and obtaining funds, is to control and analyse the firm’s finances in the short-term and in the long-term. This could be done using financial tools such as financial forecasting, risk management, ratio analysis, and profit & cost control.

What is the importance of Financial Management?

There are some reasons for being this field most important

these reasons are:

  • It helps organizations in financial planning
  • It helps organizations in the planning and acquisition of fund.
  • It helps organizations in effectively utilizing and allocating the funds received.
  • Assists organizations in critical financial decisions
  • It helps in improving the organizations
  • It helps in increasing the overall value of the firms or organizations.
  • It provides economic stability.
  • Encouraging employees to save money, that helps them in personal financial planning.

How to be financial manager with Optimus?

Optimus offers you its own financial management program, which designed to enhance the capabilities of finance professionals. and also serves as a first step in the Finance Management profession.

This program is highly recommended to entrepreneurs and business professionals, who would like to get a thorough knowledge to accounting practices and theory, and to any learner who is interested in accounting, or finance as a future career.

 

This program consists of 2 modules + graduation project to be discussed with the Instructor

Module 1

Strategic Financial Management

In this module The learners will develop knowledge, understanding and skills that will enable them to analyse internal and publicly available financial information. This will help to inform strategic decision making.

Module 2

Accounting

This unit will enable learners to develop knowledge, understanding and skills in financial and management accounting.

If you want to know more, Contact us now and get your certificate in financial management from Optimus accredited from ATHE & QUALIFI within just 48 training hours. And make a big change in your business and career.

To know more about financial management program and all Optimus courses. Visit our website

https://optimusinstitute.ae/

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