The Importance of Financial Management in Business
Author : Michael Jordy | Published On : 05 May 2021
Finances are really important for a business. If the finances are not stable, then the business can collapse. It clearly means that one of the most crucial departments in a company can, rightly, be the finance department. It is so because this department is the backbone of a business. If there are loopholes in the financial statements, then big problems occur within an organization.
Financial management is taught in ACCA as well. ACCA financial management students have great concepts to ace their professional career. ACCA financial management students work great in the field and had to deal with numbers all the time. Moreover, ACCA financial management students should have great management skills to allocate and manage the funds properly. If you too want to or are studying ACCA, SKANS ECampus’ comprehensive study program can be the one-stop solution for you.
Importance of Financial Management for Business
In FM, the financial business concerns of the organization are gathered, and financial planning is done in order to clear those concerns. Planning in any organization plays a really important role. When you plan things beforehand, then the business runs smoothly without any flaws. As far as financial planning is concerned, it is also really important for a business. When a business plans the finances ahead of time, then there is very little chance of fraud or ambiguity. So, this is a great benefit of the financial management ACCA.
FM helps to gather funds
Every company needs funds and finances to operate, and acquiring those funds at the right time plays an important role in stabilizing the company. Another aspect that needs to be kept in mind is the fact that those funds should be acquired at minimum cost. This depicts the efficiency of financial management ACCA as the goal of FM is to keep the cost as minimum as possible. Sometimes you need funds urgently in a short span of time. The FM benefits the company at large by acquiring the funds needed at the hour of need.
Make informed decisions
Financial management also helps the company by making sound financial decisions for the company. Taking the right decision at the right time can save a company from bearing a loss. There are many important decisions that a company has to take. But the most important ones are those that the finance department makes because many other departments interlinked to the financial department. Furthermore, many departments are dependent on the financial department for funds allocation. So, financial management helps the company by making the right financial decisions.
Using available funds properly
Another financial management benefit is the proper use of funds. Concerned authorities should use the funds of the company wisely. Financial management helps in this arena as well as it helps to grant the funds to all the departments that need it. But business should do it in an efficient way that the total cost of capital should not increase much.
Elevate the profits
Furthermore, financial management helps in increasing the profits of a company. If the financial management is implemented properly, then the profits increase by proper utilization of the funds that are available. Financial management helps to increase profit by implementing techniques like budgetary control, ratio analysis, and cost volume profit analysis.
Financial management focuses on creating a great image of the company. This happens when the company is gaining great profits. When a company is earning lots and lots of money, then colossal perks come with it. Many investors want to invest in that company because of its high profits. Many people want to work in that company. Another point is that the company starts to be ranked in the top earning companies list.
All in all, FM plays a major part in running a business with ease and making it successful.