How to Manage Business Finances Accurately and Effectively

Cách quản lý tài chính doanh nghiệp chính xác, hiệu quả

Finance is a key resource to help companies carry out their business activities and grow. Hence the problem company financial management is always a task to which all companies pay special attention.

In this article, Mrs. Uptalent will learn with the readers some information about the financial management of companies as well as the importance of this profession for companies.

1- What is the financial management of a company?
2- Who is responsible for the financial management of the company?
3- Why is it necessary to manage corporate finance?
4- What does financial management include?
5. Closing

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1- What is the financial management of a company?

Corporate financial management includes a series of necessary activities such as planning, directing, organizing and controlling financial relations arising from the production and business process of a company.

Or you can also simply understand that corporate financial management means managing a company’s capital and cash flow to optimize profits and grow the business. In which, the source of capital of the business includes cash, assets, income, receivables, debts, etc.

Managers always attach great importance to the financial management of the company, as it affects the ability to achieve the short and long-term goals of the company.

At the same time, financial management activities are always associated with the accounting and finance department. This appears very clearly in the company’s financial statements.

2- Who is responsible for the financial management of the company?

Finance is the key resource for companies to carry out their business activities. Therefore, companies should pay attention to financial management from the very beginning.

Good financial management will help businesses allocate resources appropriately, thereby achieving overall business goals and growth.

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It can be seen that the financial management of a business is an extremely important job. It is also at the forefront of business owners, CEOs, and business leaders.

Usually, the chief financial officer (CFO) will be the head of the company’s financial management apparatus. They will be responsible to the General Manager for matters related to the financial activities of the company.

The CFO is responsible for making three important financial decisions, namely investment decisions, capital raising decisions, and profit distribution decisions. In addition, this position is also responsible for organizing the implementation of the company’s financial decisions.

All decisions made by CFOs are geared towards the common goal of maximizing value. In other words, the CFO should strive to maximize the value of the capital that business owners and shareholders have spent.

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To achieve the above overall objective, the CFO will perform the following main tasks:

– Build and organize the financial management apparatus of companies.

– Research, analyze and solve problems related to the financial activities of companies.

– Plan capital requirements, capital raising plans, and plans for operating and utilizing resources in the most efficient and economical manner.

– Make a reasonable profit distribution plan to ensure the harmony of interests between the parties participating in the capital contribution.

– Forecast of financial risks and implementation of risk management.

– Strictly control the use of company assets to prevent loss, waste or misuse of assets.

Business financial management

3- Why is it necessary to manage corporate finance?

Effective financial management creates favorable conditions for companies to promote business activities, maximize profits and achieve set goals.

Basically, the financial management of the company has the following roles:

3.1- Securing the financial resources necessary for production and commercial activities

Through financial management, companies can effectively control cash flow for production and business activities. Thanks to this, the company always runs stably and can develop continuously.

3.2- Helping Companies to Leverage and Regulate Business

Financial management helps businesses plan and distribute financial resources appropriately. Consequently, corporate financial resources will become economic levers to help increase productivity as well as capital efficiency.

In other words, financial management can help companies regulate their business activities effectively and achieve a higher rate of return on investment.

3.3- Helping businesses make investment and spending decisions

The CFO will need to appropriately determine investments and expenses related to the acquisition of assets, technology and investment in human resources.

If done right, companies can achieve growth commensurate with their investments, while meeting market needs and growing sustainably over the long term.

3.4- Overall control of production and commercial activities of the company

By monitoring and monitoring the flow of cash flow, namely income and expenses, financial position and financial indicators, leaders can accurately grasp the operating status of the business.Karma.

From there, they will quickly detect any issues that arise and take appropriate corrective action to ensure that the business process is still stable and efficient.

What is Corporate Financial Management?

4- What does financial management include?

Financial management activities generally include the following main tasks:

4.1- Financial planning

Thanks to business plans, managers can know the company’s position in the market and the objectives to be achieved. Meanwhile, financial planning can provide businesses with the information needed to properly allocate funds to business plans.

In addition, the financial plan is also an important basis to help companies calculate and prepare the capital needed to maintain and develop business activities.

In general, a clear and precise financial plan is the basis on which companies can forecast and properly allocate financial resources for better business performance as well as growth and development.

4.2- Financial management

Financial activities must be systematically controlled and managed. Thus, companies can monitor, update and aggregate all information related to financial transactions such as purchase of assets, investment or use of capital for business activities.

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Companies will have to regularly monitor transactions on credit accounts, bank debts, mortgages, salary funds, etc. in a unified and logical way to quickly detect unusual points and quickly address them.

For bad debts, companies must take steps to deal with them during the financial year. These amounts should not be suspended for many years as this will affect income as well as the planning and stability of business activities.

In addition, companies also need to make periodic cash forecasts and regularly update reports to quickly understand data and business situation. If a problem arises, the company’s CFO must resolve it quickly.

What does business financial management include?

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4.3- Maintenance of financial assets

Here, financial assets are understood as liquid assets and their value is expressed in terms of contractual rights or property rights. Some common assets such as cash, bank deposits, stocks, bonds, etc.

A business cannot survive if it runs out of funding. Therefore, managers must implement effective financial management so that the company’s cash source not only does not lose, but can also continue to be profitable.

Specifically, managers will need to develop anti-fraud measures to protect and prevent the loss of financial assets. The best way to achieve this is to establish regulations, policies and procedures to audit and control internal operations.

Each month, the CFO should reconcile the balance of deposits, loans and interest with the bank statements. This will help them understand the financial situation of the business to make the best decisions.

In addition, they must also have a plan to invest the idle money of the business to generate profits. With high-profit projects, companies will receive a huge amount of money.

4.4- Identifying and managing risks

A company’s financial or investment decisions involve risk. The job of a CFO is to control risks well and get the best return on investment.

The thing to do before making an investment decision is to identify possible risks and plan to prevent or prepare countermeasures to minimize the impact of risks at the lowest level.

There will be unexpected and unpredictable risks. At this time, regularly knowing the cash flow and building up a reserve fund is the optimal solution to help companies overcome risks.

Another benefit of maintaining a reserve fund is that it can help businesses prevent and effectively manage the effects of unforeseen risks.

Remember that financial markets are always volatile and full of unexpected risks that can prevent companies from achieving their short and long term goals. If companies do not have strict financial management measures, the risk of bankruptcy is always very high.

5. Closing

It can be seen that business financial management plays a central role in the operation and development of businesses. To be able to effectively use and control financial resources, you need to ensure that your business always adheres to financial management principles and has effective risk management measures in place.

Faced with financial decisions, you must think carefully to be able to obtain excellent returns with an acceptable level of risk.

There will be no global solution adapted to all financial management companies. Therefore, as a corporate finance manager, you need to know about financial management and look for suitable financial management tools and solutions for your business.

Above is some information that Ms. Uptalent would like to share with readers on corporate financial management. I hope the article has helped you understand why it is important to manage business finances as well as work related to this issue and can effectively manage your business finances. Good luck!

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