The role of financial management in business


For any business money serves as a mean of settlement and investment resource. Doing business is impossible without a sufficient reserve funds. Inability to make current payments in order to meet company's financial obligations, means the failure of any business and implies its bankruptcy. The first task of financial management is to avoid the situation where at when current financial resources of your business exceed its liabilities. The financial department of any modern business perform the following major tasks: maintains the necessary level of liquidity, minimizes the tax payments, minimizes risks, ensures optimal assets structure.

Financial management is an important part of the economic system of the enterprise associated with the planning, forecasting, analysis and control. Financial department of any company enables mangers obtain information needed for making effective management decisions. To increase the effectiveness of financial planning and its positive impact on business performance, it is necessary to use modern controlling tools, which provide an opportunity to react on changes in the external environment more quickly.

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