The financial management of enterprises is usually carried out by managers and financial directors. Their responsibilities include creating a system of financial relations of the enterprise, as a separate business entity. To create such a system and its functioning, any financial information is used. This is the accounting data at the enterprise, information of banks and various exchanges (stock, currency, commodity),
The methods of financial management are extensive. These include concepts such as forecasting, planning, insurance, self-financing and lending.
Financing of the enterprise is carried out through self-financing and bank lending. Self-financing is usually done through
capitalization of a share of profit. The amount of a bank loan depends on the results of the bank analyzing the economic activity of the enterprise and predicting the possibility of its return. The costs of the enterprise include interest on the use of credit. You can raise capital in another way - by issuing bonds and placing them with investors or the public. This type of lending, unlike banking, is long-term. Part of the capital can be raised by issuing shares, in which case, their owner will have the right to participate in the financial process and the right to receive dividends.
Methods of financial management include financial analysis and planning. Planning allows you to assess financial needs and distribute financial flow in the necessary areas. At this stage, financial statements are compiled, which allows to obtain objective data on financial flow, necessary borrowed funds and a comparison of planned and actual indicators. Planning sets the further economic strategy of the enterprise on the basis of the analyzed data.
The methods of financial management can include a system of financial sanctions, a reward system, rent, leasing, as well as principles of pricing.
Any financial system cannot exist independently. It is guided by applicable laws, decrees, decrees and orders of the President, Government and Cabinet.
What are the principles of organizing financial management? This definition of strategy and focus, as well as planning and systematic.
Planning as a whole for the enterprise and its divisions is aimed at
organization of production, distribution of monetary and labor resources within
business unit. Knowing the principles of work, it is not difficult to identify the tactical goals of financial management. Of course, the primary goal of any enterprise is to make a profit, increase productivity, introduce innovative projects, and become well-known in the market. Using the principle of multidisciplinary allows you to increase the stability of the enterprise in a competitive battle, and investing in securities gives guarantees of its savings.
The principle of strategic orientation allows you to determine the boundaries and framework for the development of the enterprise, the search for new options for capital allocation, the introduction of innovations.
The search for new development paths requires new capital investments, which is not always justified in case of unstable financial activity or in a crisis, since it requires a quick distribution of capital in this direction. Profit during this period is not always guaranteed.
Methods of financial management are designed to ensure the stability of the enterprise in any conditions and the guaranteed availability and increase in profitability.