What is Financial Management?

Objectives of Financial Management
Building on those pillars, financial managers help their companies in a variety of ways, including but not limited to:
Maximizing profits by providing insights on, for example, rising costs of raw materials that might trigger an increase in the cost of goods sold.
Tracking liquidity and cash flow to ensure the company has enough money on hand to meet its obligations.
Ensuring compliance with state, federal and industry-specific regulations.
Developing financial scenarios based on the business’ current state and forecasts that assume a wide range of outcomes based on possible market conditions.
Dealing effectively with investors and the boards of directors.
Ultimately, it’s about applying effective management principles to the company’s financial structure.
Scope of Financial Management
Financial management encompasses four major areas:
Planning
The financial manager projects how much money the company will need in order to maintain positive cash flow, allocate funds to grow or add new products or services and cope with unexpected events, and shares that information with business colleagues.
Planning may be broken down into categories including capital expenses, T&E and workforce and indirect and operational expenses.
Budgeting
The financial manager allocates the company’s available funds to meet costs, such as mortgages or rents, salaries, raw materials, employee T&E and other obligations. Ideally there will be some left to put aside for emergencies and to fund new business opportunities.
Companies generally have a master budget and may have separate sub documents covering, for example, cash flow and operations; budgets may be static or flexible.