Process of Financial Management

There are three key elements to the process of financial management:

1)Financial Planning: Management need to ensure that enough funding is available at the right time to meet the needs of the business.funding may be needed to invest in equipment and stocks,pay employees and fund sales made on credit.In the medium and long term,funding may be required for significant additions to the productive capacity of the business or to make acquisitions.

2)Financial Control: Financial control is a critically important activity to help the business ensure that the business is meeting its objectives. Financial control addresses questions such as: Are assets being used efficiently? , Are the businesses assets secure? ,Do management act in the best interest of shareholders and in accordance with business rules?

3)Financial Decision making: Investments must be finances in some way-however there are always financing alternatives that can be considered. For example it is possible to raise finance from selling new shares. A key financing decision is whether profits earned by the business should be retained rather than distributed to shareholders via dividends.

All these areas of financial management apply to your personal life ,how families finances are managed are all related to financial management.