Financial management is the discipline that deals with the management of a company’s financial resources, paying attention to its profitability and liquidity.
Financial management, in fact, has a very wide scope of action within the company. Thus, he is in charge of key movements of the company. She is in charge of the organization, planning, direction and control of the financial resources belonging to the company.
So that concerns this, all investment decisions, financing, as well as decisions about dividend distributions. Therefore, the role that financial management comes to play within the company turns out to be fundamental. The durability of any business organization depends on it.
The aforementioned is highly understandable, given that the money resource is a key source within any company. In short, let us bear in mind that finance and financial administration share functions and objectives. And that the elements of financial management belong to the branch of finance.
Origin of financial management
The origin or birth of financial administration is found essentially from the so-called industrial revolution. With the emergence of this historic event, companies had a crucial need for an adequate team of people. That is, with a certain department that manages the financial resources of the company with specific criteria to guarantee its greater profitability.
Functions of financial management
The functions of financial administration are:
- Manage and make decisions regarding all investment activities to be carried out by the business organization.
- Search, obtain, evaluate, decide and comply with all aspects that involve the company’s source of financing.
- Manage and make decisions regarding the treatment of dividends obtained by the company.
- Carry out the management of the tax burdens of the business organization.
- Achieve the maximization of the benefits or profits of the company according to the risks.
- Budgeting and projecting every aspect of the organization’s activities.
Therefore, the functions of financial administration, in charge of the financial administrator, are very broad and complex within the company. Since this has to scrutinize every financial movement of all activity within your organization.
Objectives of financial management
For its part, the objectives of financial management are described below:
- Achieve adequate maintenance of the company’s resources, so that it can operate correctly in its radius of action.
- Constantly streamline the use of all the resources obtained.
- Optimally managing the risks and uncertainties that the company faces in each investment.
- Constantly seek the maximization of the company’s profits.
- Achieve a satisfactory management of the dividends achieved by the organization.
As can be seen, financial management within a company can pursue as many objectives as it has functions within.