Finance management is the practice of handling a company’s finances in a way that allows it to be successful and compliant with regulations. That takes both a high-level plan and boots-on-the-ground execution.
Objectives of finance management
Ensures regular and adequate supply of funds to the concern.
To ensure adequate returns to the shareholders which will depend upon the earning capacity, market price of the share, expectations of the shareholders.
To ensure optimum funds utilisation. Once the funds are procured, they should be utilised in the maximum possible way at least cost.
To ensure safety on investment, i.e, funds should be invested in safe ventures so that an adequate rate of return can be achieved.
To plan a sound capital structure - There should be sound and fair composition of capital so that a balance is maintained between debt and equity capital.
Financial managers project how much money the company will need in order to maintain positive cash flow, allocate funds to grow or add new products or services and cope with unexpected events, and shares that information with business colleagues.
The financial manager allocates the company’s available funds to meet costs, such as mortgages or rents, salaries, raw materials, employee T&E and other obligations. Ideally there will be some left to put aside for emergencies and to fund new business opportunities.
Companies generally have a master budget and may have separate sub documents covering, for example, cash flow and operations; budgets may be static or flexible.
Finance management controls involves analysing how the company is performing financially compared with its plans and budgets. Methods for doing this include financial ratio analysis, in which the financial manager compares line items on the company’s financial statements.
Here on Infobwana, you will find various companies that provide professional finance management services in Zambia.