Financial management is one of the main part of the science of management. Definition of Financial Management are all activities of business entities (organizations) within the framework of the use and allocation of funds business entity (company) efficiently. This notion undergone various developments originated from the notion that merely activism acquire / obtain any funds to cover the activities gain, the use of funds to the management of the assets (assets).
understanding of financial management
financial management
Also read the previous article: Definition of Management
George R Terry says there are four activities that are often known by the POAC berakronim Planning - Organizing - Actuating - and Controlling.
Definition of Financial Management, according to experts
There are some experts who gave an opinion on the Definition of Financial Management:
James Van Horne, stated:
all activities or activities related directly to the acquisition, of funding as well as asset management (assets) with the overarching goal.
Suad Husnan, found:
Financial management is the management of all financial functions terhahap
Bambang Riyanto, defines:
All activities undertaken by companies associated with efforts to obtain the funds needed with minimum cost and terms that menguntunggkan and uapay to use the funds obtained will efficiently and effectively
Liefman states:
The definition of financial management is an effort to provide cash and use the funds to acquire assets (assets)
As mentioned earlier at the beginning, by looking at some of the above understanding, understanding of financial management is simply a process in the financial activities of the company, starting from how to acquire funds and use them. its use should be well targeted, efficient, and effective so that the company's financial objectives that have been defined in the planning can be realized.
Financial management is not just the accounting records alone. Financial management is an important part and can not be considered as a separate activity that is part of the work of financial people.
Financial Management in practice is an activity performed and appeared in order to nourish the finance company or organization. therefore, in making a financial management system, we need these principles into effect, among which :.
Consistency (Consistency)
in principle this consistency, a sistam and corporate financial policy must be consistent, do not change from period to period, but keep in mind that the financial system does not mean there should be an adjustment if there is a significant change within the company. Financial inconsistent approach could be a sign that no manipulation on the financial management of the company.
Accountability (Accountability)
This principle is a legal or moral obligation, which is attached to individuals, groups or corporations to memebri explanation of how the funds nor the authority that has been given to a 3rd party use. the parties should be able to give an explanation about the use of resources and what has been achieved as a form of accountability to the stakeholders, so that all know how the authority and funds that owned it used.
Transparency (Transparency)
Management should be open to work, provide information about the plan and all the activities to stakeholders, including providing financial reports were reasonable, complete, timely and accurate yagn can be accessed easily by an interested party, if not transparent, then this could indicate management has hidden something.
Viability (Survival)
So that the financial health of the company maintained, all operating expenses or strategic level must be adapted to the existing funds. the survival of the entity is a measure of a level of security as well as the financial sustainability of the company. financial management should develop a financial plan which shows how a company can execute its strategic plan in order to meet financial requirements.
Integrity (Integrity)
Every individual must have a level of integrity that is capable in carrying out operational activities. besides records and financial statements must be maintained intergritasnya with the completeness and accuracy of a financial recording
Stewardship (Management
Financial management should be able to manage with qualified funds that have been obtained and provide assurance that the funds raised will be used to realize the goals that have been set. in practice, the management could do to be cautious in making strategic planning, identifying existing financial risks and to develop and make the appropriate financial control systems.
Accounting Standards (Accounting Standards)
Financial accounting system used must comply with the principles and standards of applicable accounting rules. so that the financial statements produced can easily be understood by all interested parties.
Financial management is the management of the finance function, and the function of financial management is how to use and putting the existing funds. functions within the company should be carried out well considering the existing functions related to each other.
As discussed above, the financial management has three main activities
Acquisition Fund, an activity aimed at obtaining financial resources, ntah came from internal company or sourced from an external company
Use of Funds, an activity to use or invest the funds that exist in various forms of assets
Asset Management (Asset), this activity is an activity that is carried out after the funds have been obtained and it has invested or allocated in the form of assets (atkiva), the funds must be managed effectively and efficiently.
So, with the activity of the above activity, in other words, financial management decision-making functions is a decision on funding, investment and asset management (asset)
Financial Management aims to maximize the value of the company. Management should be able to press the velocity of money can avoid unwanted activity. Remember, the main purpose of a company is to maximize or increase the welfare of the owners of the company. shares outstanding is proof of ownership, the welfare of the owners reflected the market price of the company, the price of the company is the result of management decisions regarding investment decisions, decisions on funding and activities in managing assets, decision-making that will impact the stock price of the company owners ,
Investment Decision (Investment Decision)
Investment means investment in real assets or financial assets (securities), investment decision is a decision on what assets will be managed entities / companies. This strategic decision will berpegnaruh directly to the size of the investment and the profitability of the company 'flow of funds in the future.
Financing Decision (Function Funding)
The decision on funding is to study the various sources of funds of the company, in the financial statements are in the liabilities side. This decision must consider the source of the funds at minimum cost and also conditions that can benefit both from company internal and financial resources from outside the company (external).
Dividend Decision (Decision Dividends)
In this function, the decision usually involve things like:
The magnitude of the percentage of profits to be distributed to the owners in the form of cash
level of stability of dividends to be distributed by the management
stock dividend, (stock dividend)
stock split (stock split)
Withdrawal of shares outstanding
In addition the following I provide some detail things done by the financial management:
Planning for Finance, the financial management plan as well as the income and expenditure to fund other activities in certain periods
Doing Budgeting finance companies, this is a follow-up on financial planning by drafting in more detail all expenditures and revenues of companies
Financial management of the company, in this case, financial management to use the funds in the company to make this a variety of ways that can be taken
Finding funding resources, financial management company trying to find the source of funds that will be used the company's operational activities
Financial storage, financial management saves to secure the company's funds have been collected.
Control of finance, financial management to evaluate and fix a financial system in which the company is deemed not qualified
Conduct audits, internal audits of financial statements of companies carried out by financial management to ensure no adverse deviations occur
The company's financial reporting, financial management presents financial information about the present state of financial companies that could be used as an evaluation later.
Other financial management functions if it is associated with some of the above:
Supervision of the cost
Determination of the pricing policy
Forecasting future earnings
measurement or assessment fees for working capital
Okay, enough about the basic articles of the Financial Management thank you see you next time