The essence of financial management
The main content of financial management is to manage the formation, distribution and use of financial resources and optimize management of their turnover of funds. The material basis of financial management is a cash turnover, which causes a change in the form of value and is accompanied by streams of payments and settlements.
Efficiently manage cash turnover means:
• anticipate its possible position in nearby and distant prospect;
• be able to determine the amount and intensity of the receipts and expenditures of funds both in current and in the long run.
In a broad sense financial management - a strategy and tactics of financial support entrepreneurial activity, allowing to manage cash flow and find the best financial solutions.
The concept of "financial management" can be viewed simultaneously in three aspects:
• a system of sound financial management company;
• how financial management body of the company;
• as a form of entrepreneurial activity.
As the system of financial management enterprise financial management is the process of developing goals and financial management of enterprises to achieve with the methods and tools of financial mechanism. In this aspect of financial management is not only an effective system of financial management, but also one of the key subsystems of the overall system of the company, in which issues are resolved:
• What should be the optimal size and composition of assets to achieve the goal of business;
• where to find sources of funding and how best to form their target structure;
• how to organize current and future financial management to ensure the solvency and financial stability of the company?
The general scheme of financial management as the enterprise financial management system shown in Fig. 1.1.
Characteristic features of financial management is its complexity, dynamism and sensitivity to changes in environmental factors.
The complexity of enterprise financial management system is conditioned by its significant structuring. Multivariate financial instruments and methods of financial management bahatokomponentnist facilities are complemented by the complexity of their elements. In particular, an object of financial management as financial relations, in turn, is a whole system of elements, which significantly complicates the financial management.
Dynamic financial system caused by the constant changes in the financial indicators of the various aspects of financial activity due to the continuous stream of cash expenditures and revenues of the company.
However, the dynamism of financial processes at the plant caused by the openness of financial management of the impact of information flows, considerable sensitivity of financial results to changes in environmental factors. Therefore, the choice of specific financial instruments, financial management techniques and instruments must take into account not only the internal capabilities of the enterprise, but also external factors such as inflation, legal and regulatory support, tax environment, the price of resources, competition, market stage in selected market segments like.
These factors can not be changed by management decisions and financial management tasks is to develop adaptation measures that allow to adapt to changes in the environment in the near term and the long term.
To make the best financial decisions according to the real business environment need a reliable current information. Efficiency of such information is the key to effective financial management of the impact on its facilities.
• Effective financial management of the company is possible only provided that the stability of the financial system as a whole, not just its individual components and subsystems.
• Given the complexity, dynamism and sensitivity of the financial system entities to external changes, financial management should be situational.
As the governing body of financial management including financial directorate and direct financial managers through various management measures have a meaningful impact on the financial activities of the company. Financial managers are responsible for setting financial problems, expediency of choosing a specific solution available alternatives, implementation of the decision, the implementation of operational financial activities.
In the above aspect of financial management appears not only the subject of management, but also the object of which is influenced by the flow of administrative decisions by the management of such entities as public administration, finance and tax agencies, banks, insurance companies, owners property. In this regard, there are often conflicts between listed entities management and financial management as a management system. The task of the financial manager - possibly to avoid such conflicts.
You can call these functional responsibilities of the financial manager:
- Financial organization of the entity;
- Rationale for investment;
- Developing financial plans and financial standards;
- Determine the volume of receipts and expenditures of funds;
- Organization of credit relations;
- Conducting monetary policy (for entities engaged in foreign economic activity);
- Execution of financial records;
- Analysis of the financial condition of the company;
- Monitor the implementation of the planned financial performance;
- Participation in the development and implementation of proposals to improve the financial and economic activity (improvement of financial resources, capital accumulation, preventing unnecessary stocks of inventory, increased liquidity, including securities acquired entity, and so on. Etc.. ).
The effectiveness of financial management largely depends on the coherence of the owners, managers and financial managers of the company (for small business owner can simultaneously be a leader).
Western economists see such major differences in the activities of the manager and financial manager of the company:
• strategic orientation - plant manager searches all possibilities for further development of the company, while financial manager selects and justifies only options for management decisions to implement them available financial resources;
• implementation of ideas - to the revolutionary leader, focused on quick results, and for financial management - evolutionary, designed for the long term;
• fundraising - the head is usually focused on the temporary acquisition of necessary resources (rent, lease, etc.), while the financial manager prefers to purchase property resources and increase the number of employees in the workplace.
Finally, as a form of financial management business
provides a creative approach to solving the financial problems of scientific bases of planning and control, financial analysis, innovation (innovation). The essence of financial management as a form of business is reflected in the exchange:
Money → Services → Financial Management of Money growth
Thus, financial management is both an art higher aerobatics financial management of the company and largely depends on the qualification of financial specialists, their ability to find and economically justify the alternative scenarios and choose the best financial methods and technological schemes of financial transactions.
The basis for the review of financial management as a form of business is the availability of the financial manager of the main features of entrepreneurship as initiative, independence, risk-taking, focus on profit.