Fundamentals of financial management
Posted: Tue Jan 07, 2025 3:43 am
However, in order to evaluate how useful the information provided by financial management is and to be able to take action, it is vital to understand what its principles are, that is, the bases that govern its reason for being.
The fundamentals of financial management are:
1. Investment decisions
It determines the total amount of assets needed for the brand. It also gives importance to divestment. That is, it raises the possibility that assets that cannot be economically justified may have to be reduced, eliminated or replaced.
2. Financing
Decide the best way to inject cash into the benin phone data business and how to raise the necessary funds. It helps to understand the mechanics of obtaining a short-term loan, making a long-term lease agreement, or negotiating a bond or stock sale.
You may be interested in → E-commerce loan: when is financing useful?
3. Property management
Once assets are acquired and appropriate financing is obtained, it is then up to the business to manage those assets as efficiently as possible. A large part of the responsibility for fixed asset management falls on the operational managers who employ those assets.
Together, they determine how best to address business risks and performance.
Importance of financial management
Although we have already mentioned the advantages of managing money in business, it is important not to confuse it with simply allowing you to meet your obligations.
Knowing how to carry out the financial activities that keep a business alive (paying suppliers, payroll, taxes, etc.) is not the same as knowing how to manage money. For the former, theoretical and practical knowledge is enough, while for the latter, a strategic vision and financial intelligence are needed.
This is exactly what financial administration is responsible for . Its importance lies in the fact that it allows:
Explore all available alternatives to obtain and maximize resources.
Manage resources in different instruments to diversify them.
Going beyond traditional schemes to obtain financing.
Develop an infrastructure that enables the creation of sources of income generation.
Exploiting the benefits that exist in the corporate financial system.
Identify the mistakes that are being made in financial matters.
Act proactively to grow funds and leave behind the reactive mentality.
Make less costly decisions that satisfy needs in less time.
Know the real situation of the business and, based on that, enhance it.
Focus on what is important and not just on what is urgent.
Have the ability to plan in the short, medium and long term.
Develop financial scenarios based on the current state of the business.
Once this is understood, the next step is to make it a reality.
The fundamentals of financial management are:
1. Investment decisions
It determines the total amount of assets needed for the brand. It also gives importance to divestment. That is, it raises the possibility that assets that cannot be economically justified may have to be reduced, eliminated or replaced.
2. Financing
Decide the best way to inject cash into the benin phone data business and how to raise the necessary funds. It helps to understand the mechanics of obtaining a short-term loan, making a long-term lease agreement, or negotiating a bond or stock sale.
You may be interested in → E-commerce loan: when is financing useful?
3. Property management
Once assets are acquired and appropriate financing is obtained, it is then up to the business to manage those assets as efficiently as possible. A large part of the responsibility for fixed asset management falls on the operational managers who employ those assets.
Together, they determine how best to address business risks and performance.
Importance of financial management
Although we have already mentioned the advantages of managing money in business, it is important not to confuse it with simply allowing you to meet your obligations.
Knowing how to carry out the financial activities that keep a business alive (paying suppliers, payroll, taxes, etc.) is not the same as knowing how to manage money. For the former, theoretical and practical knowledge is enough, while for the latter, a strategic vision and financial intelligence are needed.
This is exactly what financial administration is responsible for . Its importance lies in the fact that it allows:
Explore all available alternatives to obtain and maximize resources.
Manage resources in different instruments to diversify them.
Going beyond traditional schemes to obtain financing.
Develop an infrastructure that enables the creation of sources of income generation.
Exploiting the benefits that exist in the corporate financial system.
Identify the mistakes that are being made in financial matters.
Act proactively to grow funds and leave behind the reactive mentality.
Make less costly decisions that satisfy needs in less time.
Know the real situation of the business and, based on that, enhance it.
Focus on what is important and not just on what is urgent.
Have the ability to plan in the short, medium and long term.
Develop financial scenarios based on the current state of the business.
Once this is understood, the next step is to make it a reality.