The roles of financial management have evolved significantly in contemporary times, undergoing various phases until reaching their current state. Initially, the primary responsibility of the financial manager was to secure and provide the necessary funds. Over time, the focus shifted to the utilization of these funds, ultimately expanding to encompass financing based on policies and decisions that impact project values. These values are influenced by factors such as asset types, market size, and the extent of debt utilization. Consequently, the functions of financial management can be defined across three main pillars.
This is the core responsibility of the financial manager, who must attain a comprehensive understanding of the company's operations and activities. This includes a focus on long-term plans that rely on asset expansion, which in turn determines future sales projections. In other words, the financial manager must plan for the company's funding needs while considering the inherent challenges of forecasting the future. For example, a manufacturing company may require new equipment, necessitating a significant investment. In such cases, the budget must be flexible enough to accommodate unexpected developments.
The financial manager may need to seek external sources to obtain funds and then balance costs while minimizing the risk of being unable to meet obligations. Thus, a thorough analysis of the anticipated conditions of these sources is essential before linking them with the company’s financial situation. The functions of financial management at this stage involve forecasting the company's specific needs and predicting the future of the sources the company turns to for necessary funds.
This refers to the management of financial assets and comes as the third function of financial management, following the planning of cash flows and acquisition of funds. At this stage, it is crucial to ensure that the funds are utilized efficiently and economically within the company to derive the maximum possible value from returns. Over time, the company should aim to recover its investments in these assets. Additionally, any surplus that is considered as extra inventory of products is viewed as undesirable, indicating a malfunction in the company's financial management processes.
Regarding financial management and its functions, the British Academy for Training and Development offers various courses focused on modern financial management. These courses cover essential topics such as liquidity management, emergency financing plans, asset and liability management, classification, and more. These training programs are designed to enhance the efficiency of financial management employees and elevate the standards of financial management functions towards excellence.
In summary, the functions of financial management are pivotal to the success and sustainability of any organization. The continuous evolution of these functions necessitates that professionals in the field remain updated with the latest practices and methodologies. Through comprehensive training and development opportunities, such as those provided by the British Academy, financial managers can better navigate the complexities of their roles, ultimately contributing to the growth and stability of their organizations.