Understanding Financial Management

Finance in a company becomes a strong foundation for the establishment of a company.

Finance is also very risky. If it is not managed properly, it will become messy and will
certainly stop the running of a company. In a company it takes its own field that takes care of
the finance section or it can also be called financial management.

Financial management is the activity of planning, managing, storing, and controlling funds
and assets owned by a company. Financial management must be carefully planned so that
problems do not arise in the future.

The Purpose of Financial Management

This financial management must have clear objectives, there are several financial
management objectives:

Maintain Cash Flow

In a company, the inflow and outflow of cash must be monitored continuously so that
expenses do not swell. As a result, it can cause company losses. Cash is usually spent to buy
raw materials, hire employees, and other expenses.

Maximizing Company Finance

The task of financial management is not only to oversee finances, but also to see budget
activities that are not profitable for the company that can be eliminated and replaced with
activities that are more profitable for the company.

Preparing the Capital Structure

The Finance Manager in planning the capital structure must be able to balance the budget he
has with the funds borrowed by the company.

Maximizing Profit
Proper financial planning will be able to maximize profits in the long term.

Conclusion
Managing company finances is not as difficult as one might think. The most important thing
in financial management in a company is transparency and honesty, considering that financial
problems in a company are very vulnerable to manipulation.
Increase Efficiency
By budgeting the right funds in all aspects, the efficiency of the company's funds will
continue to increase.

Optimizing Company Wealth

Financial managers must also be able to read the stock market. By providing the maximum
possible profit sharing to shareholders, it will certainly improve the company and give
shareholders confidence to continue to invest in the company.

Reduce Operational Risk

The right decisions made by financial managers will affect uncertain business risks at all
times.

Ensuring the Continuity of the Company

Financial managers play an important role in running a company. The right decision will be
able to make a company survive in business competition, but on the other hand, a careless
decision will cause a company to go bankrupt.

Reducing Capital Cost

Financial managers must make appropriate capital planning, so that the use of capital can be
minimized in such a way.