Financial management

Short description: Management of money in such a manner as to accomplish the objectives of organization

Business administration

Management of a business

Accounting

* Management accounting
* Financial accounting
* Financial audit

Business entities

* Corporate group
* Conglomerate
* Holding company
* Cooperative
* Corporation
* Joint-stock company
* Limited liability company
* Partnership
* Privately held company
* Sole proprietorship
* State-owned enterprise

Corporate governance

* Annual general meeting
* Board of directors
* Supervisory board
* Advisory board
* Audit committee

Corporate law

* Commercial law
* Constitutional documents
* Contract
* Corporate crime
* Corporate liability
* Insolvency law
* International trade law
* Mergers and acquisitions

Corporate title

* Chairman
* Chief business officer/Chief brand officer
* Chief executive officer/Chief operating officer
* Chief financial officer
* Chief human resources officer
* Chief information officer/Chief marketing officer
* Chief product officer/Chief technology officer

Economics

* Commodity
* Public economics
* Labour economics
* Development economics
* International economics
* Mixed economy
* Planned economy
* Econometrics
* Environmental economics
* Open economy
* Market economy
* Knowledge economy
* Microeconomics
* Macroeconomics
* Economic development
* Economic statistics

Finance

* Financial statement
* Insurance
* Factoring
* Cash conversion cycle
* Insider dealing
* Capital budgeting
* Commercial bank
* Derivative
* Financial statement analysis
* Financial risk
* Public finance
* Corporate finance
* Managerial finance
* International finance
* Liquidation
* Stock market
* Financial market
* Tax
* Financial institution
* Working capital
* Venture capital

Types of management

* Asset
* Brand
* Business intelligence
* Business development
* Capacity
* Change
* innovation
* Commercial
* marketing
* Communications
* Configuration
* Conflict
* Content
* Customer relationship
* Distributed
* Earned value
* Electronic business
* Enterprise resource planning
* management information system
* Financial
* Human resource
* development
* Incident
* Integrated
* Knowledge
* Materials
* Network
* administrator
* Office
* Operations
* services
* Performance
* Power
* Problem
* Process
* Product life-cycle
* Product
* Project
* Quality
* Records
* Resource
* Risk
* crisis
* Sales
* Security
* Service
* Strategic
* Supply chain
* Systems
* administrator
* Talent
* Technology

Organization

* Architecture
* Behavior
* Communication
* Culture
* Conflict
* Development
* Engineering
* Hierarchy
* Patterns
* Space
* Structure

Trade

* Business analysis
* Business ethics
* Business plan
* Business judgment rule
* Consumer behaviour
* Business operations
* International business
* Business model
* International trade
* Business process
* Business statistics

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Financial management is the business function concerned with profitability, expenses, cash, and credit. These are often grouped together under the rubric of maximizing the value of the firm for stockholders. The discipline is then tasked with the "efficient acquisition and deployment" of both short- and long-term financial resources, to ensure the objectives of the enterprise are achieved.[1]

Financial managers[2] (FM) are specialized professionals directly reporting to senior management, often the financial director (FD); the function is seen as 'staff', and not 'line'.

## Contents

* 1 Role
* 2 Relationship with other areas of finance
* 3 Financial management systems
* 4 See also
* 5 References
* 6 Further reading

## Role

See also: Finance:Managerial finance, Financial risk management § Corporate finance, Financial modeling § Accounting, and Finance § Corporate finance

Financial management is generally concerned with short term working capital management, focusing on current assets and current liabilities, and managing fluctuations in foreign currency and product cycles, often through hedging. The function also entails the efficient and effective day-to-day management of funds, and thus overlaps treasury management. It is also involved with long term strategic financial management, focused on i.a. capital structure management, including capital raising, capital budgeting (capital allocation between business units or products), and dividend policy; these latter, in large corporates, being more the domain of "corporate finance."

Specific tasks:

* Profit maximization happens when marginal cost is equal to marginal revenue. This is the main objective of financial management.
* Maintaining proper cash flow is a short run objective of financial management. It is necessary for operations to pay the day-to-day expenses e.g. raw material, electricity bills, wages, rent etc. A good cash flow ensures the survival of company; see cashflow forecast.
* Minimization on capital cost in financial management can help operations gain more profit.
* Estimating the requirement of funds:[3] Businesses make forecast on funds needed in both short run and long run, hence, they can improve the efficiency of funding. The estimation is based on the budget e.g. sales budget, production budget; see budget analyst.
* Determining the capital structure: Capital structure is how a firm finances its overall operations and growth by using different sources of funds. Once the requirement of funds has been estimated, the financial manager should decide the mix of debt and equity, as well as the types of debt.

## Relationship with other areas of finance

Two areas of finance directly overlap financial management: (i) Managerial finance is the (academic) branch of finance concerned with the managerial application of financial techniques; (ii) Corporate finance is mainly concerned with the longer term capital budgeting, and typically is more relevant to large corporations.

Investment management, also related, is the professional asset management of various securities (shares, bonds and other securities/assets). In the context of financial management, the function sits with treasury; usually the management of the various short-term financial legal instruments (contractual duties, obligations, or rights) appropriate to the company's cash- and liquidity management requirements. See Treasury management § Cash and liquidity management and Chief Investment Officer.

The term "financial management" refers to a company's financial strategy, while personal finance or financial life management refers to an individual's management strategy. A financial planner, or personal financial planner, is a professional who prepares financial plans.

## Financial management systems

Further information: Financial modeling § Accounting

Financial management systems are the software and technology used by organizations to connect, store, and report on assets, income, and expenses.[4] These provide the modeling, collaboration and workflow capabilities that spreadsheets cannot sustain at scale.[5] Here, financial managers and CFOs rely on [6] [5] [7] a range of products: traditionally, commercial EPM and BI tools such as BusinessObjects (SAP), OBI EE (Oracle), Cognos (IBM), and Power BI (Microsoft); and increasingly, specialised FP&A products provided by Jedox, Anaplan, Workday, Hyperion, Wolters Kluwer, Datarails, and Workiva. Note that - despite the issues outlined - spreadsheets remain in wide use, [8] [9] invariably as a starting point, [10] and frequently in total. (Additionally, the above products - along with company data \- are often accessed [11] via a spreadsheet add-in.)

## See also

* Financial management for IT services, financial management of IT assets and resources
* Financial Management Service, a bureau of the U.S. Treasury which provides financial services for the government.
* Financial mismanagement
* Financial risk management § Corporate finance
* FP&A
* Managerial finance

## References

1. ↑ "Financial Management". Kaplan Financial. https://kfknowledgebank.kaplan.co.uk/financial-management.
2. ↑ Financial Managers, Bureau of Labor Statistics
3. ↑ Budget Analysts, Bureau of Labor Statistics
4. ↑ "Definition of Financial Management System (FMS) - Gartner Finance Glossary" (in en). https://www.gartner.com/en/finance/glossary/financial-management-system-fms-.
5. ↑ 5.0 5.1 EPM 101: FP&A Software, cfoshortlist.com
6. ↑ Financial Planning Software, Gartner
7. ↑ FP&A Tools: Key Considerations, Corporate Finance Institute
8. ↑ The Role of Spreadsheets in Financial Management, quanthub.com
9. ↑ Why companies continue to rely on spreadsheets for financial reporting and consolidation, mondialsoftware.com
10. ↑ Jeremy Fabbri (2020). Should You Use Spreadsheets for Risk Management?
11. ↑ What is Financial Modeling?, IBM

## Further reading

* Lawrence Gitman and Chad J. Zutter (2019). Principles of Managerial Finance, 14th edition, Addison-Wesley Publishing, ISBN 978-0133507690.
* Clive Marsh (2009). Mastering Financial Management, Financial Times Prentice Hall ISBN 978-0-273-72454-4
* James Van Horne and John Wachowicz (2009). Fundamentals of Financial Management, 13th ed., Pearson Education Limited. ISBN 9705614229

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General areas of finance

* Computational finance
* Experimental finance
* Financial economics
* Financial institutions
* Financial management
* Financial markets
* Investment management
* Mathematical finance
* Personal finance
* Public finance
* Quantitative behavioral finance
* Quantum finance
* Statistical finance

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Management

* Outline of business management
* Index of management articles

By type
of organization|

* Academic
* Association
* Business
* Restaurant
* Healthcare
* Military
* Public

By focus (within
an organization)|

| By scope|

| Strategic
(top-level)|

* Capability
* Change
* Communication
* Financial
* Innovation
* Performance
* Risk
* Systems

|

By component|

* Facility
* Product
* Product lifecycle
* Brand
* Program
* Project
* Construction

By activity or
department
managed|

| Line|

* Marketing
* Operations/production
* Process
* Quality
* Sales

|

Staff|

* Accounting
* Office
* Records

By aspect or
relationship|

* Customer relationship
* Engineering
* Logistics
* Perception
* Supply chain
* Talent

By problem|

* Conflict
* Crisis
* Stress

By resource|

* Environmental resource
* Human resources
* Information
* Information technology
* Knowledge
* Land
* Materials
* Skills
* Stock
* Technology
* Time

Management
positions|

* Interim
* Middle
* Senior

Methods
and approaches|

* Adhocracy
* Collaborative method
* Distributed
* Earned value management
* Evidence-based management
* Full Range of Leadership Model
* Management by objectives
* Management style
* Macromanagement
* Micromanagement
* Scientific management
* Social entrepreneurship
* Team building
* Virtual management

Management skills
and activities|

* Decision-making
* Forecasting
* Leadership

Pioneers and
scholars|

* Peter Drucker
* Eliyahu M. Goldratt
* Oliver E. Williamson

Education|

* Association of Technology, Management, and Applied Engineering
* Business school
* Certified Business Manager
* Chartered Management Institute
* Critical management studies
* Degrees
* Bachelor of Business Administration
* Master of Business Administration
* PhD in management
* Organizational studies

Other|

* Administration
* Collaboration
* Corporate governance
* Executive compensation
* Management consulting
* Management control
* Management cybernetics
* Management development
* Management fad
* Management system
* Managerial economics
* Managerial psychology
* Managerialism
* Organization development
* Organizational behavior management
* Pointy-haired Boss
* Williamson's model of managerial discretion

Systems science portal

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