All About Financial Management

1. Financial Management
ITS IMPORTANCE & ADVANTAGES
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By:-Rahul Bisen
MU20MBA036

2. Outline :
• DEFINITION
• FUNCTIONS OF FINANCIAL MANAGEMENT
• FINANCIAL MANAGEMENT PROCESS
• IMPORTANCE OF FINANCIAL MANAGEMENT
• PRINCIPLES OF FINANCIAL MANAGEMENT
• FOUR BUILDING BLOCKS OF FINANCIAL MANAGEMENT
• FINANCIAL AND MANAGEMENT ACCOUNTING
• ADVANTAGES
• DISADVANTAGES
• CONCLUSION
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3. What is Financial Management?
 Efficient and Effective management of (funds).
 Planning, Organizing, Controlling and Monitoring.
 Process of framing financial policies in relation to
procurement, investment and administration of
funds of an enterprise.
 Example
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Definition Of Financial Management

4. 4
 Estimation of capital requirements
 Determination of capital composition
 Choice of sources of funds
 Investment of funds
 Disposal of surplus
 Management of cash
 Financial controls
Functions Of Financial Management

5. Financial Management Process
1. Budget Planning
2. Document Expenses
3. Track Expenses
4. Finalize and Close Budget
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Process Of Financial Management

6. Why Financial Management is
Important :
• Make Effective and Efficient Use of Resources.
• Gain confidence of funding Agencies, Partners and Beneficiaries.
• Advantage in competition for increasing scarce resources.
• Long Term Financial Sustainability
• Guidance In Financial Planning
• Increase Shareholder’s Wealth
• Provide Information through Financial Reporting
• Proper Use Of Funds
• Reduced Delay Productions
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Good Practice Financial Management will :
Importance Of Financial Management

7. Principles of Financial Management :
There are some guiding principles of Financial Management :
1. Consistency
2. Transparency
3. Accountability
4. Viability
5. Integrity
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Principles Of Financial Management

8. The Four Building Blocks of
Financial Management :
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There are four building blocks which must be in place to achieve
best practice in financial management. They are:
Building Blocks Of Financial Management

9. Financial And Management Accounting : 9
For the financial management to take place effectively,
financial systems and procedures need to cover two
aspect of accounting. They are :
 Financial Accounting
 Management Accounting
Financial & Management Accounting

10. This table summarizes the main
differences:
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Financial Accounting Management Accounting
Records Transaction Compare Results Against Goal
Classifies Transaction Determine Reason For Variation
Reconciles Records Helps Identify Corrective Action
Summaries Transaction Provides Forecast
Present Financial Data Analyses Information
Financial & Management Accounting

11. Advantages Of Financial Management
 Better Decision Making
 Transparency Of Information
 Finance Control
 Enhances Managerial Efficiency
 Profit Maximization And Wealth Maximization
 Avoids Debts
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Advantages Of Financial Management

12. Disadvantages Of Financial Management
 Costly
 Rigidity
 Determination Of Standards
 Difficulty In Applying Control Measures
 Problems In Recognizing Deviation
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Advantages Of Financial Management

13. Conclusion
Many People have the impression that Financial management is just about
keeping accounting records but it is an important part of programme
management and must not be seen as a separate activity left to financial
staff.
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Conclusion Of Financial Management

14. THANK
YOU
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