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Finacial Management

Finance management is an easy method of handling money of an individual or a firm which helps to decide what is the most efficient way of using the money. In managerial finance of a firm or a business, one should consider factors that the firm requires for the production (Weston & Brigham 1972). There are different ways of managing financial needs of a business because they all depend on the allocation of finances. An entrepreneur who opens a business needs different management from the one who expands an already existing one. In management the firm is considered to be a sole proprietorship or a partnership business. In a sole proprietorship, finances are better managed by one individual allowing for flexibility of finances in the business. In a partnership, financial and management decisions have to be administered by both parties. Finance is the pillar of any business and is the determining factor of growth of a firm or its downfall. Strong foundation of financial management leads to sustainable growth of a firm and the development of new projects (Weston & Brigham 1972).

Evaluation of a businesses’ financial status is a crucial matter when it comes to management of a firm. Cash flow of the business should be critically analyzed to ensure there is no unnecessary use of money. To ensure effective financial operations of a business, it is advisable for firms to hire or assign a financial manager. His work is to record, critically analyze, and eventually deliver financial statements based on firm’s operations during a certain period. Income statements should show exact values of income of the firm. Balance sheets also should show how firm’s finance initiates its development. Financial manager is responsible for all funds that enter or exit the firm. Payment of wages and salaries is under his supervision because he ensures that funds required by employees are allocated. All investment decisions should be made by financial manager because he/she determines capital investments. Every firm must have financial goals (Weston & Brigham 1972). These are the goals that need to be achieved by a given time with a constrained amount of money.

Employees of financial department  are important  since they form a team which helps the finance manager in simplifying his work. Before the manager gives out the funds, there must be a financial plan according to which the funds are to be distributed. The financial plan of an organization is important for a group of investors who already are taking risks and are investing in various fields. Team members use different ways of investing and utilizing funds. The most attractive selection is forwarded to the financial manager who gives out the funds (Gitman 2003).

When starting business where all partners are involved, financial research has to be carried out and financial report has to be forwarded to all members of the partnership. Product costs have to be indicated for stakeholders to analyze if the business  is making profit. The budget according to which the organization has to work has to be plotted and followed. The most appropriate and equally fair to all is the decision to allow budget resources to be used by all. Information necessary to support management decision at each stage has to be in the report. It should clearly  state the method used and how each level should be handled. A target has to be set to clearly show what they should expect after a certain period. Location of place of work should also be sited and prepared in the budget by financial manager to avoid financial crisis. Employees of the firm should also be in the budget of the financial manager and sample reports should be provided to them for better outputs in the market (Brigham & Ramon 1980).

In business, assignment of positions and duties should be considered as one of factors that help in financial management. Staff members should be assigned roles which they are familiar with and have experience in the field. Output should at least be sampled in the market before initializing the massive production of the product. Production manager should be assigned in the production department to have an organized production process within a given budget. A sales manager should also perform well in the sales department making more profits for the firm. In the purchase of assets, the company should consider the depreciation factor of assets and also the percentage change in depreciation over a certain period. Resources for the production of goods should be extracted from a place where there are plenty of them in case additional resources will be needed. Partners or shareholders have to wait for a certain time after the provision of capital. The capital which they need to invest has to raise profits which will be used to expand the business (Chen 1967).

Quality of a product is a key factor in the production process because with better quality of goods sales tend to rise gradually making more profits for the firm. The quantity is determined by sales of goods and the market structure of the economy. Marketing of goods should target certain group of population in a certain area. Highly populated areas tend to be profitable markets for most goods because of the different taste for goods of different people. The market can also be forecasted. Sales representatives choose various markets based on research carried out in the markets. The research provides estimates of sales expected in the market (Chen 1967).

Stakeholders of the firm are the backbone of the business because they are the ones who finance all projects. They have to be contented with the goals of the firm to continue supporting the business and financing it. Annual general meeting should be held to update stakeholders on the way the business is operating. Managers from all departments should prepare exhaustive reports showing how each of the departments is handling its responsibilities. Methods of improving each department should be clearly shown and well explained in a convincing manner for the stakeholders to approve them and be contented (Brigman & Ramon 1980).

Manufacturing of products is another important factor because they are produced in accordance to demand. Competition also substantially affects manufacturing of products because if firms were producing the same product then the production would be low due to competition. Markets are profoundly affected by competition among producers, making sales decrease. Manufacturing of goods  is also determined by factors of production available. Labor, capital, land, and resources affect the manufacturing of products greatly. Labor is the human factor required in production for manufacturing a product. Capital is the initial amount of money invested in a project or a business for profit making purposes. Land is the place or location  where the production process is to be carried out. Resource are the input that is necessary for the production of the product. Resources are crucial in the manufacturing process because they are the determinant of the amount to be produced. Resources should be readily available at all times in case the demand for goods rises. In this case more inputs will be required (Weston & Brigman 1972).

Technological change should be implemented after any upgrade of technology. In modern times, technology has made it easier for many companies and firms to market their goods because of e-marketing. This is where sales representatives are able to market their goods online through the Internet. Advanced technological change has profoundly affected the production of goods as well as financial management. Technological financing has to be included in the budget of the business. Computers have made work easier and also labor costs have been subsidized because most of the work is carried out by machines. Production has became faster, safer, and less time consuming because machines make the production faster (Brigham & Ramon 1980).

Condition of economy also determines product sales and marketing process because with a stable economy products are easier to sell. Political stability of a country also affects sales of a product. Government intervention in businesses also affects outcomes in terms of sales. Infrastructure is extremely important for sales department because with poor infrastructure sales personnel cannot access distant parts of a region. Good infrastructure leads to substantial sales. Tax collection has impacted products significantly because some products are exceedingly taxed (Brigham & Ramon 1980). Resources are highly taxed leading to inflation of prices of goods. Provision of business permits has also led to improved ways of product selling because one sells genuine products. Trademarks ensure uniqueness of products while companies making  counterfeit products are being distinguished (Chen 1967).


Financial management is a critical factor in firm’s operations because finance acts as an engine of a business. It is the main reason that the business keeps running. Without finance, a business can never exist. Financial management ensures that the supply of funds to the firm is adequate with no shortcomings. The finance department should ensure circulation of funds in every section of the firm. Budgeting of funds should be done considering all sectors of the company or business. Stakeholders’ returns should also be provided equally and accordingly to the agreed proposal of payment. Most stakeholders are receiving dividends according to the capital invested. The profit attained from sales of goods should not be totally used up but should be divided and shared among stockholders. Some portion should be left for the growth of the business. Funds should also not be misused, and the financial management should ensure total and proper utilization of funds in the firm. Unnecessary allocation of funds should be discouraged in the firm. The financial manager also should be prepared to obtain funds from the sources other than stakeholders. The financial manager should be able to obtain loans and funds from banks and other financial intermediaries. Management of funds should be performed by experienced personnel (Weston & Brigham 1972).

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