A FinTech company knows the vitality of financial management. Sound financial management ensures efficient and quick operations in the company. Its role is to manage allocating resources and the flow of capital to buy new inventory. Improper financial management can hamper a company’s growth and stability.
Financial management takes care of accounting and fixed asset management. It also ensures recognition of revenue-making and payment processing. According to the report by Statista, MoneyGuidePro Elite was the most popular financial planning software worldwide with a global market share of 28.5 percent.
Objectives of financial management
Financial managers ensure efficiency and accuracy in the company’s operations. The financial managers help the company grow statistically. However, the role of a financial manager is not just limited to the following:
| Maximise profits |
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| Track liquidity & flow of capital |
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| Making sure compliance |
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| Develop financial scenarios |
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| Effectively manage business relations |
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Role of financial management
The four fundamental roles of financial management are as mentioned below:
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Planning
Financial managers are responsible for deciding the required funds for the company to run smoothly. These funds are needed to maintain positive cash flow, allocating new resources. A company must save certain capital for a financial crisis at any given instance.
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Budgeting
Budgeting is one of the most significant features of financial management. In this, it allocates the funds to meet costs, such as mortgages or rents, salaries, raw materials, etc. Proper funds are important to pay employees on time and meet other obligations. It is advised to put a certain sum of capital aside for emergencies and to fund new business opportunities.
Companies typically create a master budget. This master budget is then further subdivided into separate sectors. For example, cash flow and operations. These budgets are further classified as static or flexible.
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Assessment of potential risks
Financial managers must know multiple techniques to overcome any potential risks. The timely assessment of risks can be a boon for the company. It includes an analysis of market trends and risks related to credits. At times, a company is deep down in debt. For times like these, liquidity and asset risks are properly studied. To ensure positive growth and stability, operation risks must be avoided at any cost.
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Procedures
The financial manager sets procedures regarding how the finance team will process and distribute financial data. These processes include invoices, payments, and reports with security and efficiency. The written financial procedures outline who makes financial decisions at the company. Various procedure templates are available for different organizations to refer to while making their own policies.
Significance of financial management
Financial management is critical to maintaining stability in the organization. The three main vital features are as follows:
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Strategic decision-making
To understand the vision of the company and work according to that. Leaders must learn insights into current financial health to forecast possible business outcomes.
Decision-making
Financial managers find a way to assist business leaders in the best way to execute plans. They are the key factor in deciding the budget of the organisation. Financial management is also responsible for up-to-date financial reports and other data.
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Controlling
The financial managers ensure equal contributions from all sectors. Effective financial management works on team building and progressing holistically.
Conclusion
In a nutshell, financial management is an indispensable part of the company. From planning to execution, the financial manager is responsible for carrying out tasks efficiently. Without proper financial management, a company’s growth may be stagnant. Thus, sound financial management ensures stability and a positive growth rate.
