Financial activity is carried out by any enterprise, regardless of its form of ownership. It consists in organizing financial relations that appear in the process of interaction with other individuals or legal entities. Such relationships are an integral part of cash that arise during the movement of funds.
Financial activity is a complex system of actions, the purpose of which is the successful formation of initial capital with subsequent proportional provision of such actions: the formation and use of income and other financial resources, the fulfillment of obligations.
This system uses various methods and forms to ensure the successful functioning of enterprises and the implementation of goals. In other words, it represents the practical financial activity of an enterprise, ensuring its vital functions and increasing its effectiveness.
One of the main goals of financial activity is considered to be the economic impact carried out in relation to partners and guaranteeing the fulfillment of their contractual obligations. Another goal is to ensure a constant circulation of funds necessary for the successful management of the enterprise, the implementation of the necessary payments and expenses, as well as profit (in monetary terms).
Financial activity involves the timely identification of the main causes of violations of such a circuit, which allows timely management decisions to be taken to eliminate them. Making informed decisions is possible subject to accuracy and completeness of accounting. Effective financial activity of the enterprise is the basis for ensuring the excess of cash income over expenses. It is she who makes it possible to make the necessary investments, the formation of reserves and funds intended to compensate for losses or damage.
The revenue from the provision of services and the sale of goods ensures an uninterrupted business process and a constant circulation of funds. Until it arrives, all production costs are financed from previously formed current assets. The result of the turnover of invested funds is the reimbursement of costs and the creation of their sources of financing in the form of profit and depreciation.
Management of financial and cash flows of the organization, interconnected, is carried out using financial management. The movement of financial flow entails a decrease or increase in cash flow. Regulation of financial flow ensures the receipt of funds necessary for the enterprise. In the process of choosing an acceptable option for a financial solution, the following points are determined: the real possibility of implementing this option; change in indicators by which they assess the financial condition for the coming periods or for the long term; associated income and expenses; conditions for the implementation of the decision; other consequences of this option.
Financial management solves a wide range of issues, which includes the entire totality of financial and economic activities for receiving and spending money. It has its own structure, which includes financial analysis (based on accounting data) and probabilistic estimates of future indicators (economic planning). Financial management is the active management of the financial condition of any enterprise using all the factors that affect it.
At the enterprise, its head is responsible for financial work. At his direction, finances are managed by a financial director, and in his absence, by a chief accountant. As a rule, the financial department is organized as part of accounting, but sometimes it is a separate structural unit.