Financial management is the techniques, tools and methods that are used in an enterprise in order to increase profitability and minimize the risks of insolvency. He pursues one main goal - to receive the maximum possible benefit from the activities of the organization, acting in the interests of the owners.
Main functions of financial management:
1) internal finance planning;
2) analysis and diagnostics of the financial condition of the organization;
3) investment management;
4) financial risk management;
5) others.
Financial management is a complex process that includes procedures of varying levels of responsibility and complexity. At the first level, financial decisions are made on the prospective development of the current activities of the enterprise, sources of financing are attracted, and a certain financial policy is pursued. These tasks are considered the most difficult and responsible. Top managers are involved in their decision, and delegation occurs onlypartially.
At the second level, various financial calculations are performed, financial documents are drawn up, reports are compiled. These are simpler tasks that are solved by employees of financial, accounting, economic services, and some of them are entrusted to enterprise divisions.
Financial management is the fulfillment of the strategic objectives of an enterprise with the implementation of an appropriate financial policy. At the moment, the most important task of the organization is to maximize the prices of the firm. Considering the theoretical foundations of financial management, one should dwell in more detail on the financial policy of the enterprise. It includes the following items:
1) accounting policy;
2) implementation of credit policy;
3) creation of cost control methods, classification of costs and calculation of the share of fixed costs in the cost;
4) conducting tax policy, as well as tax planning;
5) implementation of the investment policy.
The financial system is complex, dynamic and open. Its complexity lies in the fact that it is formed by heterogeneous constituent elements with the presence of diverse bonds between them. Dynamism is due to its constant development and changes in the value of financial resources, fluctuating demand and supply for capital. And due to the exchange of information of the financial system with the external environment, it can be called open.
International financial management includescarrying out serious financial reporting, where the responsibility for execution lies with the management of the enterprise. Results, profits and losses are considered, calculations are made of changes in the financial condition of the enterprise. The information that should be published is checked by auditors.
So, financial management is the art of managing the movement of finances, as well as controlling financial relations that arise between enterprises in the process of moving these funds. He develops goals for managing financial resources and influences them using various levers and methods of the financial mechanism in order to achieve the goal.
