Financial Management Report: Sources, Roles, and Importance

This report provides a detailed analysis of financial management, emphasizing its significance in business operations. It explores the core concepts of financial management, including strategic planning, resource allocation, and control. The report highlights the importance of financial functions within organizations, such as identifying funding requirements, evaluating finance sources, and making investment decisions. It also outlines the roles and responsibilities of financial managers, including analysis, cash flow management, and stakeholder relations. Furthermore, the report categorizes various sources of finance based on period, ownership, and generation, providing a comprehensive understanding of how businesses can secure funds for their operations. The report concludes by stressing the crucial role of financial management in ensuring business success, urging careful selection and analysis of financial funding sources for optimal performance.

Financial
Management

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Financial Management:...............................................................................................................3
Importance of financial functions within organisations:.............................................................3
Roles (job) of the Financial Manager in a company:..................................................................4
Sources of Finance:......................................................................................................................5
CONCLUSION................................................................................................................................5

INTRODUCTION
The expression financial management could be perceived as a set of practices in
wherein company's financial resources are managed in effective manner. Generally, efficacious
financial management practices of resources could contribute to greater business success, that's
because funds are key aspect on which all business operations are premised (Plaskova,
Prodanova and Reshetov, 2020). Any form of inaccuracy in this respect may give rise to a
number of problems for a corporation. In the context of the financial management, the selection
of an effective source of finance within business is essential, because issues in this respect may
result in higher operational costs. And also the streams of finance, systematic review is also
carried out. In addition, financial resources can be handled by business financial managers as
well as roles of financial managers for effective understanding explained in study.
MAIN BODY
Financial Management:
Financial management term implies to systematic strategical planning, scheduling, managing,
guiding as well as governing of business enterprises. This also comprises employing managerial
principles/guidelines to organisation's financial/capital assets or resources, as well as performing
critical aspect within fiscal management. As per the Guthman and Dougal, financial management
implies to 'the practices associated with the preparation, collection, monitoring and management
of funding employed in the company.' It concerns the acquisition and utilization of funding in the
effective way (Alkaabi and Nobanee, 2019).
Importance of financial functions within organisations:
 Identification of requirements of funding/finance: In attempt to starting any business one
requires to recognise how much funding or monies needed to start business operations.
Thus, herein finance management allow managing personnel to recognise how much or
extent funding or capital sum is available as well as how much more they require along
with choosing the most effective source to raise funds.
 Identification of most efficient sources of funding/finance: After recognising that in
business there is need of funding and owner are required to raise funds, financial
management functions enable to identify and analyse all possible sources of finance.

Moreover, this allow managing personnel to determine how much viable to borrow or
raise through different shareholders.
 Comparing/contrasting of distinct finance sources: In business context, after allocating
multiple funding sources, financial management operations allow management to conduct
feasibility analysis and comparability of costs and possible risks exists. Then perform
part in selection of best or most viable root/way of financing which most suits to
business requisites (Ameliawati and Setiyani, 2018).
 Investment Decisions: Once the funds/finance are raised then management generally
takes decision regarding investment of these funds. Finance Managerial Investment
decisions taken should be in a way that yields are greater for business. The costs of the
purchase of funds ought to be smaller than return on investment, which would indicate
that a sensible investment has been made.
Roles (job) of the Financial Manager in a company:
Financial managers have a major job to perform in handling the financial component of a
business, as is discussed below:
 One of main role/job of financial managers within entity is to perform an essential part in
the producing of various forms of analyses that serve as futuristic decision-making
mechanism.
 In conjunction, financial administrators are advantageous for enterprises to monitor their
cash flows as they offer an additional viewpoint on certain operations that contribute to
more monetary expenses or collections.
 Besides that, financial administrators are vital within businesses as they direct
organization from where they can generate funds for business's day-to-day practices and
procedures
 The financial manager has a vital part to perform in strengthening interactions with
various forms of external stakeholders, such as lenders, creditors, vendors and many
others.
 The financial officer must determine how much monies it should keep for the ploughing
back as well as how much allocate as dividends to the owners of the corporation 's
earnings The considerations that affect such decisions include trends in the business 's

earnings rise in stock price of shares, the conditions towards self-financing of potential
projects and so forth.
Sources of Finance:
Based on Period:
 Long-Term Source of Finance – Long-term funds have been used for upwards of five
years generally. Fund are made up of preferences and stock shares and stocks, etc., and
therefore is collected from financial/capital market.
 Medium Term Source of Finance – Mid-term funds which last longer than a year and
lesser than 5 years generally. The source involves lending through public deposits,
financial institutions, term loans up to 5 years, lease financing etc.
 Short Term Source of Finance – Such kind are funds generally required for short term
objectives of business and for 1 year. Overdrafts, Working Capital debts, short term
lending from commercial banks, trade credit etc. are certain illustrations of such sources
(Shrotriya, 2019).
Based on Ownership:
 Owner’s Fund – These funds are mainly financed by business/company’s owners or
promotors, also regarded as owner’s funds/capital. Fund is gathered by the sale of
preferred shares, deferred dividends, equity securities, etc. These are longer-term capital
resources, that form the foundation for investors to gain their rights to leadership and
control activities of the company.
 Borrowed Funds – These funds are collected with the aid of deposits or loans over a fixed
period or duration This stream of funds is most frequent and famous of all companies.
For instance, loans from industrial banks including other banking institutions.
Based on Generation:
 Internal Sources – The owners have created funds within organisation. Instance for this
context is the disposal of properties and remaining profits etc.
 External Source – The funds are organized from outside organization. For example, the
issuing of equity securities to the public debts, loans with financial institutions etc.

CONCLUSION
On the bases of the aforementioned study project, it can be inferred that the financial
management is crucial factor for businesses that needs to be regarded in an appropriate manner.
A thorough review of the theory of the financial management as well as its significance has been
rendered in the paper. In addition, the position of financial managers for corporate companies is
also clarified in depth. The later part of the study-report suggests that businesses need to
carefully select their financial funding sources as well as analyse their viability for better
performance.

REFERENCES
Books and Journals:
Plaskova, N.S., Prodanova, N.A. and Reshetov, K.Y., 2020. Dealing Operations as a Means of
Improving the Efficiency of the Financial Management of a Production Company.
In Complex Systems: Innovation and Sustainability in the Digital Age (pp. 61-70).
Springer, Cham.
Alkaabi, H. and Nobanee, H., 2019. A study on financial management in promoting sustainable
business practices & development. Available at SSRN 3472415.
Ameliawati, M. and Setiyani, R., 2018. The influence of financial attitude, financial
socialization, and financial experience to financial management behavior with financial
literacy as the mediation variable. KnE Social Sciences, pp.811-832.
Shrotriya, D.V., 2019. Internal sources of finance for business organizations. International
Journal of Research and Analytical Reviews, 6(2), pp.933-940.