The Financial Management main role is to plan, organise and govern all the financial activities of a company. It applies management ethics to the financial resources of a company. This practice controls all the economic operations of an enterprise like utilisation of funds, procurement of funds, payment, accounting, risk assessment and everything related to the cash.
Key Roles of Financial Management
Financial management governs all the financial activities of a company. A few key roles are mentioned below:
- Bookkeeping and Accounting: It is essential to identify, take appropriate measures and record all the financial details of a company. Whatever funds are debited or credited from a company’s account, the financial management efficient accounting system gives an overview. Also, the bookkeeping records the everyday transaction of a company and forms a base for the accounting system.
- Reporting: Most of the stakeholders depend on the organisation’s financial statement before taking any decision. The finance team shares a financial report to its shareholders regularly. Depending on the report the shareholder forecast on when to buy or sell the stock. So, the accuracy of the financial data is essential to make a decision.
- Receivables and Payables: Managing what your company owe to the vendors and what the customer owes to the company is essential. It gives a clear view of how much liquid cash a company should have in all time.
- Investment Opportunities: The Financial report gives the opportunity to invest in the right stock and at the right time. Only after seeing the financial status, an organisation can leverage the correct openings.
- Risk: A robust financial management system is mandatory to maximise the profit and minimise the risk and liabilities. An efficient financial team should incorporate sufficient insurance to all the essential elements of a company.
The above mentioned is the concept, that is elucidated in detail about ‘What is the role of Financial Management?’ for the Commerce students. To know more, stay tuned to BYJU’S.