Expert: most notably cash management, choosing sources of funds and disposing of profits
8 functions of financial management that contribute to the success of organizations
The financial manager determines the amount of dividends to be distributed to shareholders.
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Mohamed Helmy: “(Financial management) is a system that aims to facilitate the movement of money between individuals.”
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Financial expert and tax agent, Mohamed Helmy, said that there are eight basic functions that financial management contribute to the success of institutions.
He added that the concept of "financial management" is a system aimed at facilitating the movement of money between individuals, and it is a means by which money exchange occurs between lenders, investors and borrowers. All easily.
He explained to "Emirates Today" that the functions of the financial management are:
1- Determining the structure of the capital
One of the capital requirements is to know and make the decision regarding the percentage and type of diversified funds. Therefore, the financial manager makes the appropriate mix of debt, and determines short and long-term debt, which contributes to determining the minimum capital, and improving shareholders' opportunities.
2- Estimate the required capital
It is a major function of the financial manager, as all companies need to purchase fixed assets, provide working capital requirements, expand and modernize the business, and determine the funds that his company needs in the long and short term.
3- Buying money
The finance manager negotiates with creditors, buys what his company needs, and looks at all the other conditions of the market, its conditions, market policy, government, and the choice among investors.
4- Choosing the sources of funds
Before purchasing any resource, the finance manager procures and identifies the financial source, and may collect financing from various sources of bond holders, stocks, foundations, and banks.
5- Disposal of surplus or profits
The financial manager determines the amount of profits to be distributed to shareholders, and issues decisions that may affect the direction of those profits, and the self-financing of any future program.
6- Use of money
Work to invest money well and achieve the maximum return from it, and this is when the financial manager makes the decision, as he is guided by the following principles of liquidity, profitability and safety.
7- Money control
Evaluating the company's financial performance is very important, through cost control, budgeting, ratio analysis, break-even, and all financial planning methods.
8- Cash management
The management of cash and current assets is very important for the financial system, as the financial manager predicts any cash flow from inside or outside, in order to ensure that there is no excess or shortage of liquidity in the company.
Advantages of financial management
■ Provides a payment mechanism by means of the smooth flow of money between all persons within their economy, through transactions that occur between sellers and buyers of a good or service.
■ It works to bridge the gap between savings and various investments, as it invests money that is in an idle state with individuals, and transfers it to those who invest it in projects.
■ Reduce risk by distributing money to a large number of people, so that when any damage occurs, it is divided among the largest number of people.
■ It helps in the formation of capital within the country, to form the assets and financial resources of factories and large companies.
■ It raises the standard of living of individuals within the community. Financial management helps provide liquidity and freedom in the transfer of money between savers and other groups that invest in it, which provides sufficient money to support the economic process.
■ pushes the wheel of economic growth, because it uses financial resources in ideal ways, exploiting idle resources in useful means, which lead to the creation of wealth.
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