Handling the finances of a business meticulously is the key to the success of any company. The main function of financial management is to prepare the business plan and ensure that all departments strictly implement and follow it. The management receives the required data from the VP or CFO to create a vision for the long term, make informed decisions about investing, and get details on how to fund these investments. In addition, the management will also have an estimate of expected profits and liquidity.
The finance teams can utilize the latest ERP software to accomplish these targets. If your company is a startup or small or medium business and lacks proper financial management, you can seek the assistance of Joseph Stone Capital to manage finances and make a business plan using its experienced and skilled finance professionals.
Functions of A Financial Management System
The company’s financial management comprises various financial functions like revenue recognition, managing fixed assets, accounting, and payment processing. All these key components are integrated to ensure real-time visibility into your company’s financial state. It also facilitates the daily operations of your company.
The finance manager will help the company maximize profits by providing insights on rising raw material costs, which can increase the cost of your products. The purchase department can find ways to procure raw materials from other sources at reduced rates without compromising on quality or deviating from the specifications. This will help lower the cost of your goods and improve your competitiveness in the market.
The finance manager will also play an essential role in ensuring sufficient funds to handle business activities. In addition, the finance expert ensures compliance with federal, state, and industry-specific regulations.
Finance experts at Joseph Stone Capital will also engage in making financial scenarios for your company’s current business and developing forecasts considering various market conditions. In addition, it maintains excellent relationships with the board of directors and investors.
Budgeting, planning, managing, and assessing risks, and procedures are the four major areas in financial management. The finance head will update the management about the fund requirement to maintain a positive cash flow, make provisions for unexpected spending or events, and make funds available for the addition of new products. Planning is classified into workforce, T&E, capital expenses, and operational and indirect expenses.
Budgeting is an essential function of financial management and is necessary for the success of the company. The finance professional allocates funds meticulously for raw material purchases, salary payments, meeting tax payments, rents or mortgages, and other expenses. In addition, some funds are allocated for scouting new business opportunities and emergencies. So, a master budget is prepared ahead of the beginning of the new financial year, involving all the departments and estimated fund requirements and expenses.
Helps in Assessing and Managing the Risks
The finance experts will assess the risks and provide measures to manage them to their business executives. Some of the risks include credit risk, market risk, operational risk, and liquidity risk. Finance teams are responsible for tracking cash flow and providing working capital, as well as managing expenses in the future. If a company is not receiving collections from customers, the finance heads will find low-cost funding options to support the business’s growth.