Financial Management: Functions, Executive Roles, & Finance Sources

This report provides an overview of financial management, emphasizing its importance in organizations. It details the functions of financial management, including planning, organizing, and monitoring financial activities, and highlights the roles of financial executives and managers in allocating profits, financial monitoring, and capital investment. The report also explores various sources of finance, differentiating between short-term options like bank loans and commercial papers, and long-term options such as preference shares and equity shares. It concludes that effective financial management is crucial for the growth, stability, and sustainability of any business.

FINANCIAL
MANAGEMENT

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK...............................................................................................................................................3
1. Financial management and its function prevailing in organisations:......................................3
2. Role of Financial executives and managers in organisation:..................................................4
3. Sources of finance:..................................................................................................................4
CONCLUSION ...............................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Financial management is the process of managing the funds of the business. In every
organisation, there is a issue related to scarcity of resources. The resources of the organisation
must be managed effectively (Lo and Liao, 2021). This report contains the importance of
financial management. The financial management helps in forecasting the future outcomes of the
business. The funds of the business are need to be arranged from several sources. These sources
can be either short term or long term.
TASK
1. Financial management and its function prevailing in organisations:
 Explanation of Financial Management: It can be defined as effective and efficient
planning, organising, directing and monitoring of undertakings related to finance based
areas in a firm or enterprise. It also considers implementation of management principle
towards the financial assets of a company, meanwhile it also serves a important role in
managing funds which are scarce in nature. Financial management can be explained as a
important method which helps to increase profitability scale, decrease expenses, cut
down costs minimize risk and threats that surround the firm. It counts managing and
preparation of monthly budgets that would be helpful in carrying out related activities
which would help in growth and expansion of business in competitive areas (Al-Dmour,
Al-Dmour and Rababeh, 2020).
 Function performed in Financial Management: There are many functions that are being
carried out in financial management such as Allocation of resources, planning funds well
in advance as where to invest how much. It helps to manage cash flow statements, useful
in taking effective decisions that would help in preparing and developing budgets for
future purposes. It searches effective ways for handling monetary aspects with the help of
proper plans, organising, directing and controlling related funds so available with the
organisation over a period of time.
 Importance of Financial Management: Financial management is necessary in every type
of firm be it any small scale company or large enterprise working on international
grounds. Managing of finance i.e. funds/ cash is mandatory as it provides support and
guidance to organisation for carrying out critical finance based decisions. It also helps to

improve the profit earning scale of business and increases the overall value of business. It
ascertains sustainability and stability in economic terms for every enterprise. It is helpful
in overcoming obstacles coming on way of smooth functioning and running of business
in environment (Meena, Girija and Kayathri, 2018).
2. Role of Financial executives and managers in organisation:
There are many important and efficient roles that are played by managers of every
company such as:
 Allocating profit earned: When the company experience a situation where it has adequate
profit and money available with itself it the duty of financial supervisors to locate it to
best possible alternatives for desired outcomes. One part would concentrate on growth
and expansion of business through innovative ideas and other would focus on providing
dividends to the linked shareholders or stakeholders.
 Financial monitoring: Financial manager is demanded to understand the usefulness of
proper planing and implementation of actions so planned in advance. This can be done
with the help of methods such as risk management, controlling cost and computation of
ratios as well.
 Investment of capital: Every business is required to invest its funds at a place which
would generate more revenues in relation to gain returns on a regular basis and capital
gain as well. This depicts that the manager must keep its cash and funds safe. It is
necessary that the supervisor must understand where to invest and what amount to invest
and at what time it must be invested (Rampini, Viswanathan and Vuillemey, 2021).
3. Sources of finance:
 Short Term Finance: It can be explained that type of activity In which money borrowed
must be paid back within a time span of one year. There are several types of short term
fund requirements:
1. Loan from bank: It states borrowing funds from financial institutions at a definite
interest rate for a specific period of time. Bank grants loan to borrower in exchange
of security that is needed to be deposited at the time when applying for loan.
Consumers are required to pay interests on a regular basis towards banking
institutions on a amount being approved. A loan is covered by bank either on the

basis of lump sum quantity or on basis of instalment as opted at the point of time of
accepting the offer.
2. Commercial papers: It can be explained as a insecure promissory note bought into
existence by high credit worthy organisations for generating short term fund. The
maturity time period of such key sources range between 3 to 6 months. Commercial
paper are issued by firms to banking institutions, insurance enterprises or business
related funds at discounted rate on face values and can be redeemed at their face
value on maturity (Ucar, 2019).
 Long term Finance: Fund can be raised with the help of following methods which can be
paid back over a duration of multiple years.
1. Preference shares: It can be stated as shares which are given more preference in terms of
dividend and final payment at the time of dissolving.
2. Equity shares: It can be defined as a capital market instrument which is being issued by
organisations for generating and possessing funds for a longer duration. Such shares
reflect capital owned by a business. Equity shareholders are said to be the real owners of
the company and also have voting rights available with them.
CONCLUSION
From the above asserted report it can be concluded that financial management is
important in every area. It is useful for carrying out related functions and decisions which would
help to assess effective results. It is necessary for every business to understand the role of
manager in management of funds available and how they can be put to best possible uses. It also
takes in account various measures that would help in growth and expansion of company.

REFERENCES
Books and Journals
Al-Dmour, A., Al-Dmour, R. and Rababeh, N., 2020. The impact of knowledge management
practice on digital financial innovation: the role of bank managers. VINE Journal of
Information and Knowledge Management Systems.
Lo, F.Y. and Liao, P.C., 2021. Rethinking financial performance and corporate sustainability:
Perspectives on resources and strategies. Technological Forecasting and Social
Change. 162. p.120346.
Meena, S., Girija, S. and Kayathri, S., 2018. Financial Management System. International
Journal of Engineering & Technology. 7 . pp.71-72.
Rampini, A.A., Viswanathan, S. and Vuillemey, G., 2021. Retracted: Risk management in
financial institutions. Journal of Finance. 76(5). pp.2709-2709.
Ucar, E., 2019. Creative culture, risk‐taking, and corporate financial decisions. European
Financial Management. 25(3). pp.684-717.