Introduction to F. M:- The secrets of good financial management are to keep things simple, develop routines and get into good habits. People sometimes worry that financial management will be a very complicated, difficult and intellectual process. But in fact the best financial systems are very simple and easy to follow. The more complicated the system, the greater the chance that something will go wrong or that someone will make a mistake. Remember, the legal responsibility for financial management lies with every member of your management committee and not just the treasurer.
Your management committee and members must know who is responsible for the financial tasks in the organisation and these should be clearly defined in your trustees’ written roles and responsibilities. F. M definition:- 1) Financial Management means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise. It means applying general management principles to financial resources of the enterprise. 2). The management of the finances of a business / organisation in order to achieve financial objectives ). Financial management is that managerial activity which is concerned with the planning and controlling of the firm’s financial resources. 4). The planning, directing, monitoring, organizing, and controlling of the monetary resources of an organization. 1}Nature and scope of F. M:- The nature of financial management is the relationship with economics and accounting, its functions and its scope. Financial management is the way and the means of making money, the application of the functions of planning and control to the finance function.
The modern approach to financial management is to find out how much money is required by the company in question, and then to source at least that amount. The amount should then be invested to ensure that the objectives of the financial management and the company as a whole are met. To break this down into simple terms, financial management have the responsibility to estimate the funds required, raise the funds and finally to invest the funds. When raising finance a financial management team should ensure that they strike a balance of owned and borrowed funds.
This is simply so the company does not have too big an amount of debt on its hands. Once the funds have been raised it is important to spend them wisely, normally on fixed assets and using the balance as working capital. Fixed assets should only be purchased if they can add value to the business, especially long-term value. Most fixed assets that would be purchased by a company will be expensive so they need to be able to produce work for a considerable period of time.
Working capital will be required for the day-to-day running of the company, and for emergencies. This working capital should not be too large as spare money may gain interest in the bank but it should be cycled back into the company. An important decision of financial management is how much to pay the shareholders, and how much to retain as working capital for the business. Shareholders expectations, and the company performance as a whole, need to be taken into consideration when making this decision.
Scope of financial management is vast and important to business. It is involve in all level of management and all fields of human activities. We can prove that without good financial management, no organization can be alive. Organization (duplicate name of selfish group of people) is helpful for people and wants welfare of public. But, it need fund, money and cash and for getting it, it uses techniques of financial management. 2}Role and objectives of F. M:-