Financial management can be defined very simply as the department or role in an organization that is focused on expenses, profits, credit and money, so basically the “company can have the resources to carry on with its responsibilities as to ensuring its continuing operation.” In business financial management includes a whole range of related activities. It starts with the formulation of financial plans and objectives, identifying means to meet these plans and supervising their accomplishment. Financial management also involves the monitoring of the effective operation of financial instruments, the allocation of resources to achieve these plans and the conduct of transactions in order to maintain efficient operations.
The key function of financial management is to ensure that all parts of the company to get what they need to do their jobs effectively. Some of the areas in which a firm must focus on our cash management, planning and forecasting, market analysis, risk management, inter-company and international relationships among others. While all these areas are important, cash is probably the most important, since cash is the most important factor in determining the success or failure of any firm. All these aspects are made more important by a proper financial management system.
A good manager is one who can keep track of the changes taking place in the financial world, whether it is positive or negative. He should be able to anticipate changes in tax law and other financial conditions, since financial statements are prepared based on information that is normally not available prior to a recession. This job requires someone who can work with financial markets and with the accounting system effectively. A good financial manager should be capable of making informed decisions in order to achieve financial goals. A financial manager has to be completely dedicated to the task of financial management.