A Guide To Finance Management

No matter what your business is, strict finance management is needed. Due to its importance, the financial team is often considered the backbone of any company.

The team is responsible for the budget as well as managing the capital that companies have invested or acquired.

Unlike accounting, finance is an area where you study to manage and manipulate money. It is aimed to enable the capital to fit the budget of the company and help it prepare for future success.

Need to know more? Well, this page will reveal everything you need to know about financial management.

Financial Management: What Is It?

When it comes to a financial management definition, there are several versions you can find out there.

However, in a simple sense, the term refers to an effort by companies to plant, manage, store, as well as control funds or assets.

To avoid problems in the future, the implementation of the management is carefully conducted. In this way, qualified supporting equipment is highly needed by companies to implement it.

Finance Manager Job Description

The finance management job description ranges from analyzing day-to-day financial activities of the company to providing guidance related to future financial plans for upper management. It can be said that finance managers are the root of all major decisions related to businesses. 

As the prominent financial management goals are managing funds and assets of a company, finance managers can be assigned to many environments.

These can be private and public sector organizations. Not only that but they can also work in a wide range of industries including finance, insurance, healthcare, banking, and more.

Most of the time, finance management roles and duties include monitoring accounts, reviewing financial reports, and preparing financial forecasts.

They are also employed to investigate methods and strategies to increase profitability. The finance managers are also responsible to find the best ways to analyze markets to create business opportunities.

These can be mergers, expansions, or acquisitions. To be a finance manager, you need to hold an advanced degree in economics, accounting, finance, and business. You also need to have several years of experience in the finance team of a company.

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Finance Management

Degree in Finance Management

Students who take a major in financial management and accounting learn how to make logical decisions related to companies. They study how to plan, analyze, and manage the aspects of finance and economics in businesses. 

Generally speaking, a major in finance and financial management degree comes with a few concentrations.

These include Public Finance, Credit Management, International Finance, Financial Support Services, Investment & Securities, Financial Planning & Services, and more. 

While pursuing a degree in this major, you can also take a finance management course in various fields.

These can be courses in accounting & statistics, investments, financial markets & institutions, financial management, and international finance.

There are some levels you can find in financial degrees. They are associate degrees, bachelor’s degrees, master’s degrees, and doctorates.

Depending on the finance management degree that you pick up, pursuing your diploma might need you to spend 1 to 4 years in the university.

While an associate degree requires 60 to 70 credits (2 years), a bachelor’s degree requires 120 credits (4 years). Meanwhile, the credit requirement for a master’s degree is 50 to 70 (1 – 3 years).

If you want to take a doctorate in financial management, you also need to complete coursework that includes a thesis or dissertation. As for the program length, obtaining your doctorate can take 4 years on average. 

Among these degree types, a bachelor’s degree seems to be the most popular education level for those who want to pursue a career in finance wealth management. Studies reveal that 38.9% of employers are getting one on average.

Students who just graduated from finance and financial management might earn a salary up to $51,534.

Depending on the company, the earnings can range between $13,200 to $183,600. The difference in salary also highly depends on the education level acquired by the company.

Financial Management Functions

The implementation of a finance management system in a company comes with several functions. If these functions are not properly implemented, the overall performance of the company will be affected significantly.

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1. Estimating Capital Adequacy

Financial management exists to make it possible for financial managers to predict the capital adequacy of a company effectively.

When finance managers appraise the capital adequacy estimation accordingly, they can improve the revenue capacity of the company.

2. Assess the Composition of the Capital

Once the capital adequacy of the company has been assessed properly, finance managers should determine the structure of the capital.

The implementation of this financial management function needs an analysis of the ratio of debt to equity in both the short and long term. 

This stage can be very tricky for every finance manager. This is the area where mistakes often occur. From payroll errors to payroll errors, every financial mistake, even the smallest one, can lead to disastrous effects on a company.

But, thanks to today’s technology like finance management software makes things easier for those who work in a financial team.

With the software, any error in financial management can be minimized. Not only that but the tool can also be used to streamline corporate financial management.

3. Select the Best Funding Source Option

The decision to pick up the right company funding source is another function of financial management.

Aside from equity capital possessed by the company, some funding source options can also be provided by third parties.

These external source options include debt securities, bank, issuance of shares, bank, and financial institution loans.

4. Cash Management

Cash management effort is another active role in the financial management of a company. This is a critical function since cash is used to pay day-to-day operations of the company, monthly bills, spending on raw materials, salaries, liabilities, and more.

5. Financial Control

Last but not least. Financial management also functions to control the finances of a company. There are many ways that finance managers can do a control effort. These can be ratio analysis, financial forecasting, and cost & profit control in finance management.