Find Legal Topics > Business Laws > The Facts on Financial Management

The Facts on Financial Management

The Facts on Financial Management What is Financial Management?

Also referred to as managerial finance, finance management that concerns itself with the managerial significance of financial techniques in relation to a company’s business model; in short, financial management assesses a company’s balance sheet. Finance management is concerned with a company’s cash management, in relation to the costs of producing or manufacturing the entity’s products or services. 

The fundamental difference between a technical and managerial approach can be inferred through the questions latent in a company’s annual report. Once concerned with the technical aspect would be interested in measurable: are funds being assigned to the right aspects of the business. By contrast, one concerned with financial management would inspect the meaning behind the calculations and subsequent figures. 

What does a Financial Manager do?

A financial manager, will thus, compare the returns to other companies in their industry and evaluate how their business is performing in relation. If the financial manager’s company is performing worse than its competitors, the manager will assess the source of the problem, the entity’s profit margins and the expenses of all corporations involved in the evaluation, including employee pay. Furthermore, a financial manager will look at fluctuations in asset balances and inspect any indicators that signify toxic debt holdings. While evaluating these figures, the financial manager will also inspect the entity’s working capital to anticipate future cash flow problems. 

The techniques utilized in money management (sometimes referred to as cash management or financial management) is an interdisciplinary approach that utilizes concepts from both corporate finance and managerial accounting. Adept financial management practices will promote organizational agility through the allocation of resources amongst competing business models and opportunities. In summation, financial management is an aid to monitor various business strategies and bolster an entity’s business objectives. 

What is Cash Management?

Cash management is a broad term that denotes a variety of functions that aid businesses process payments and receipts in an efficient manner. Cash or money management services include a wide range of services, aligned with investing and balancing an entity’s cash reserves.

More specifically, in the American banking system, cash management also refers to a marketing term for certain services offered to larger businesses. Cash management can detail all bank accounts (savings and checking accounts) provided to business entities; however, it is more commonly used to denote specific services, including clearing facilities, zero balance accounting and cash concentration. Rarely are private banking customers awarded these cash management services. 

What is Capital Management?

Within the broader field of financial management, exists capital management—a process used to illuminate decisions regarding a firm’s working capital and short term financing needs. This process involves managing the relationship between a company’s  

Related Topics