Before you start your own business, every future businessman would not be bothered to learn, but better to thoroughly study financial management. What are the objectives of financial management and what are the functions of financial management - let's try to figure it out.
What is financial management?
Every manager should know that financial management is a set of certain techniques and tools that companies use to increase profitability and minimize the risk of insolvency. Its main task is to obtain the greatest benefit from the activities of the subject in the interests of its owners. It is customary to refer to the main functions of capital management:
- internal monetary planning;
- an estimation of a monetary condition;
- control of current assets, liquidity;
- management of investment portfolios, capital structure;
- the conclusion of contracts with banking institutions, funds and exchanges.
Strategic financial management
Know the basics of building a business is not enough. Details play an important role here. You can get the maximum result, only having thought out all the details and having built a concrete plan for future actions. Control of the whole process is important in every business plan . Investment management is a strategy of financial management, which assumes:
- choice of criteria for making investment decisions;
- material assessment of the project;
- selection of the most acceptable option for investment;
- certainty with sources of investment;
Assess the investment due to different criteria. It is generally accepted that the funds are profitable when:
- profit more costs;
- return on investment exceeded inflation;
- the profitability of a particular project is greater than the rest.
It is really very important to take into account such a factor as time, because over time, the value of money may decrease, and the longer the investment period, the more risks. For this reason, such methods are often used:
- capitalization of income;
- discounting of capital;
- ways to reduce the possible material risk.
What is the essence of the golden rule of financial management?
Compliance with the main rules in each industry always leads to better results. Own business is no exception. Many managers and those wishing to hold high office are aware of the golden rule of financial management. Some experts in this field assure that there are not one, but at least five such postulates. Adhering to them, you can achieve success and declare yourself as a pro and a strong competitor. There are five laws for directors:
- It will not be possible to become successful without applying strong financial management . Most of the failures in business are the result of poor management, and these are inadequate investments, and debts, and inattention to expenses and incomes.
- You can not control what can not be measured . Although intuition often helps in its work, it is more important to measure performance, therefore it is necessary for oneself to decide what to measure.
- It is important to pay attention to the causes and their consequences . Measuring the final result is not enough.
- Since everything is relative, it makes sense to compare and compare . This is required in order to obtain better results. That the profit has increased, business should develop.
- Do not be afraid of difficulties . One possible reason for the failure of a businessman may be a situation in which management seemed very complicated and complicated.
Types of financial management
It is accepted to divide such types of management:
- Aggressive management involves achieving goals in the shortest possible time with the maximum use of borrowed material resources. At the same time, the risks will be really high.
- Conservative is the opposite of aggressive. Here the main goal is to ensure the stability of the company's development. In this case, the risks will be minimal.
- Moderate can be called a reasonable compromise between conservative and aggressive. The main objective of such a guide is to ensure the need for financial resources and the creation of insurance reserves.
Goals and objectives of financial management
The goals of this management are directly related to those tasks that are pursued by a certain subject. It is customary to single out the maximization of the market value of the enterprise. The tasks of financial management are as follows:
- Forming the necessary amount of resources in accordance with the company's development goals.
- Optimization and restructuring of the company's current assets and liabilities structure.
- Optimization of the level of material risks.
- Finding both forms and methods of achieving equilibrium, significant material results in the development process.
- Optimization of decisions in the monetary plan;
- Improvement of calculations.
- Controlling the state and efficiency of resource use.
- Work on the image of the company.
Principles of financial management
The management of the company can be at the highest level, but for this it is important to follow certain rules. Basic principles of financial management:
- orientation to strategic development tasks;
- Integration with a common management system;
- allocation in the management of both investment and material solutions;
- building and adherence to the specific structure of the company;
- separate management of cash and income;
- an acceptable combination of profitability of the enterprise and increase of liquidity;
- complex formation of management decisions;
- high dynamics of leadership.
Methods of financial management
The very concept of financial management should be understandable to every leader in this or that sphere. At the same time, it is important not only to know, but also to apply the methods of financial management in practice:
- forecasting;
- planning;
- a system of monetary assistance;
- settlement system;
- crediting;
- collateral transactions;
- rent;
- leasing;
- trust operations;
- incentive system.
Financial management - books
Manage the enterprise with the mind will help every manager of the book on financial management. Such literature will inspire every future entrepreneur and help to understand how to properly plan an action plan in order to ultimately obtain the maximum return on invested capital. In the top of the most popular publications:
- A. Sheremet "The Theory of Economic Analysis" ;
- B. Fepps "Smart business indicators" ;
- D. Clayson "The richest man in Babylon . "