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In order to make the business work smoothly, a number of areas need to be managed. Among all these areas, finance is one of the most important one. The finance is one of the most important things that each business owner should address as it impacts almost everything the company does.
In order to practice comprehensive financial management, companies need to obtain and allocate funds across the operations and set supportive guidelines for these activities. It has been found that a company with strong financial management procedures and processes governing the business usually makes the right decisions. A proper financial management system helps a company associate all these procedures and include more of its processes in financial decision-making, and this results in long-term benefits.
Importance of Financial Management in Companies
Ms. Bharti Jogia-Sattar has vast knowledge in financial and corporate management and at present she is operating as an independent consultant in the greater Los Angeles metropolitan area. She says that financial management is important for the company as it involves the implementation of financial principles that help a company to achieve its primary goal by increasing the business value.
Ms. Jogia-Sattar says that a strong financial management system can benefit the company in the following way:
- A proper financial management offers greater opportunity that helps to grow capital value in the long term and maximize the profits in the short term.
- It also helps the company to raise finance easily and perhaps at a lower cost.
- The most important benefit of a financial management system is transparency of information that it offers. Usually, it is found that the owner and the accounting personnel are the ones who know and understand the financial stats of the company. However, with the help of a proper financial management system all employees can get access to the system and can know the company’s financial performance. This helps the employees to improve their performance as a result of which the company tends to get profits.
- The process of budgeting becomes all the more complicated as the company grows. A proper financial management system allows various departments to track their spending and make constant adjustments and this helps in reducing budgeting complexity. Rather than meeting regularly to discuss the budget, department heads can monitor what they and others are doing and offer astute explanation on any matters that have impacted the budgets. In addition to this, the financial management system helps to facilitate tighter budget control.
Therefore, it can be said that financial management system is of great help as it allows tracking of the financial events accurately on a timely basis. It also helps in evaluating the strength and weakness of a business organization.
About Ms. Bharti Jogia-Sattar
Ms. Jogia-Sattar has been in the field of finance and accounting for more than a decade now. Before coming into this field, she has completed her graduation from Bryn Mawr College and then she has obtained Bachelor of Science in Business Management and Chemistry from Eastern Michigan University.