Financial administration is the discipline responsible for planning, organizing and controlling the monetary resources of a business, in order to ensure its profitability.
It is of little use for a business to generate millions of sales if it does not manage its money properly. This situation only causes financial problems that, over time, become unsustainable and put its continuity at risk.
To avoid this, it is necessary to resort to good practices.
Types of financial management
Strategic financial management: responsible for planning, management, performance control and analysis of the brand's risk position, especially the allocation and organization of capital.
Operational financial management: its main benin phone data function is to ensure financial liquidity, guaranteeing the smooth running of operational transformation processes, in accordance with a previously established plan.
Benefits of proper financial management
Keeps finances in order.
Improves asset and liability management.
Determines the investment recovery time.
Facilitates the allocation of budgets to meet objectives.
Analyze the opportunities and challenges that arise.
Identify what resources are needed to maintain the operation.
Minimizes uncertainty when making decisions.
It promotes growth and the achievement of financial stability.
Provides key information on business behavior.
Recognize the break-even point (when income covers fixed and variable expenses).
8 objectives of financial management
Financial management provides competitive advantages, but all these results are only obtained when clearly defined objectives are pursued.
In this context, the objectives that financial administration seeks to achieve are:
Provide information: generate useful, relevant and accurate data.
Managing risks: ensuring that the company does not face undue pressure or risk.
Improve operational control: improve financial controls and workflow.
Maximizing company value: exploiting the areas that best suit you.
Provide peace of mind: keep accounts and financial resources in good condition.
Plan: define what steps to take and what decisions to make to grow.
Evaluate projects: ensure that projections and budgets are realistic and achievable.
Preserve performance: optimize the use of resources, savings, investments and financing.
If the plan is not defined in advance and in time, all the efforts made by the team would be misdirected and the chances of success would be low. Even if the company were to generate profits, the situation would be the same; poor financial management of profits is considered one of the main causes of business failure.