Financial management: methods, goals and objectives

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:43

Finance management means a set of certain methods and techniques of purposeful influence, which are used to achieve a certain result. This is a very multifaceted topic, which is difficult to fully cover in one article. After all, we can talk about managing the company's finances, personal savings, public funds, and also take into account many additional points, such as: the system, methods, analysis, efficiency and the process itself.

General information

Initially, we need to figure out what is of interest to us:

1. Control object. These are various types of financial relations that are associated with the formation of cash income, the accumulation of funds and their subsequent use by individuals, business entities and the state.
2. The subject of control. These are the organizational structures and personalities thatmanage the money.
3. Financial apparatus. The set of organizational structures that manage cash.

Together, they form a system that allows for high-quality and efficient financial management.

Concepts you need to know

Good theoretical preparation minimizes the number of practical problems. In money matters, there are several important points that will allow you to build a good financial management system. In short, it is planning, forecasting, operational management and control. What are they? In short, then:

1. Financial forecasting. Assumes planning. It consists in evaluating a certain set of options and choosing the best of them. Works out the issues of cash flow at the micro and macro levels.
2. Financial planning. It is a justification process built on scientific principles. In this case, it implies the development of plans for a certain period, which consider the emerging relationships and the movement of financial resources. It is used to specify forecasts, determine indicators, interconnect tasks, and also select methods that will be applied to achieve the goal.
3. Operational management. It is a set of measures that is developed on the basis of an analysis of the current situation. Pursues the goal of obtaining the maximum effect with a minimum of costs.
4. Control. It is used as a control element in the processes of planning and operational management. It is necessary to compare actual results with planned ones and identify reserves for increasing the volume of resources and the efficiency of their use.

Let's say a word about principles

The financial management process should be based on certain basic foundations that give order and structure to all actions. As such, the principles are the main requirements that are put forward by the structures that manage the money supply. They boil down to these statements:

1. Leadership always depends on the ultimate goal pursued.
2. It must meet the interests of the individual (owner, team, company, society, state).
3. When achieving the goal, it is necessary to take into account the influence of objective economic laws.
4. In the process of work, the real financial and economic conditions in the country of operation and abroad should be taken into account.

About methods and tasks

The main goal that is pursued is to achieve financial stability. Therefore, the tasks and methods of financial management vary depending on who we are talking about. If it's about the state, it's one thing. The position of the individual requires a different approach. Thus, the state has to solve the following tasks:

1. Ensure macroeconomic balance.
2. Reduce the public debt.
3. Achieve a balanced (surplus) budget.
4. Ensure the stability of the national currency.

The following financial methods are used for this:

1. Analysis.
2. Planning and forecasting.
3. Mobilization of financial resources.
4. Control.
5. Information and legal support of subjects of financial relations.
6. Regulation.

Public financial management has been studied very thoroughly, therefore, with the desire and due diligence, it is not a problem to ensure the effective use of funds. What about in other cases?

What else can be said about the state?

First of all, you need to remember that it functions for people. And his goal is their comfort, not the maximum possible profit. This must be taken into account during the implementation of financial management. But this does not mean that the state cannot take part in projects that promise profit. But the main thing in this, as a rule, is the social component - that is, what the implemented idea will be useful for local residents or the whole society.

What does enterprise financial management look like?

Let's imagine that there is a medium-sized commercial structure. Management functions in this case are assigned to the financial department, which is assisted by accounting and auditors. At the same time, the received data is transferred to the top management, which takes the fateful (for the enterprise)solutions. At the same time, attention is paid to both current information and data from past periods. After all, it is necessary not only to monitor the flow of funds that are going on now, but also to control the actions taken for various violations (waste and so on). An important role in this process is played by the analysis of financial management. It should be understood that all information that is taken into account for decision making is based on primary accounting documents. Therefore, before doing anything on its basis, you should analyze the data for inaccuracies, discrepancies and other possible deviations that will allow you to judge the presence of certain problems or concealment of information.

Importance of good governance for an enterprise

The financial sector is a reflection of the success of the enterprise. Even small fluctuations can indicate the presence of significant problems (both now and in the not too distant future). And as you know, the best crisis is the one that was successfully prevented even before it occurred. Moreover, based on the results of the enterprise's activities, one can draw conclusions not only about its position, but also about the situation on the markets. If Treasury can also spot the oncoming storm in a timely manner, then it has time to prepare to respond to it, potentially giving it an advantage over other companies. At the same time, the methods of assessing the situation developed within the framework of economic science play a special role, for the use of which it is necessary to take care of the availability of an educated and qualifiedpersonnel. This is often quite expensive, but losses tend to be much more expensive.

And most relevant - personal finance

Who among us has not dreamed of having a good and successful life? But it doesn't come free. To get it, you have to work hard, including on yourself. One of the most important things along the way is personal finance management. In general, this process looks easy. The biggest problem for many people is self-discipline and organization. After all, it is not enough to know something - you also need to act. In short, personal finance management is based on fixing all income and expenses, as well as looking for opportunities to save money on unimportant items in order to redirect flows to higher priority goals. And once again - the weakest point for most people who think about rationalizing their lives is self-discipline and organization. Whatever a person decides, no matter what tools he uses, without these two points, the whole thing can go to the bottom. Therefore, managing personal finances requires determination and discipline. And these qualities cannot be obtained under duress.

How to deal with finances?

The main goal pursued is to ensure a higher safety and targeted use of funds for priority and important tasks. What exactly is the second thing. For example, to save money for a house, own business, study. FirstIn turn, it is necessary to resolve the question of how exactly this will all be organized. You can start a notebook where funds will be recorded at the time of the start of accounting, income and expenses. Or, in accordance with the spirit of the times, get a thematic program on your smartphone, tablet or computer. Since the second option is more convenient, it needs to be considered more carefully. Separately, it is necessary to work on developing the habit of entering information about all changes and decisions made. For example, in the evening, before going to bed.

Using personal finance software

First of all it is necessary to mention the fact of automation. Many actions do not need to be performed independently, since the program already considers everything. For example, the sum of all income or expenses. In addition, there is often a functionality for presenting data in a graphical form, which greatly simplifies the perception of information, compared with numbers. The efficiency of financial management is also affected by the fact that you can easily keep records of even the smallest amounts, because the device’s memory requires less than paper to display all the information. In addition, navigation is more simplified, and if necessary, you can get data even for past years, without making significant efforts and without wasting your time. Although it should not be forgotten that there is a need for electricity to operate the device. Therefore, it is better to opt for software that works in standalone technology (laptops, tablets, smartphones). At first, due to unaccustomed speedwork may be relatively small, but gradually everyone will be able to appreciate that managing finances using a computerized approach is very convenient.

Conclusion

So let's sum it all up. Financial management is a set of various methods and techniques that are aimed at achieving established goals. It is necessary to distinguish between the work in this direction of states, various organizations and individuals. Each of them has its own goals, objectives and methods to achieve them. But at the same time there are common features expressed in the form of principles.