Overview of Financial Management

Financial Management

• Financial management encompasses planning, organizing, directing, and controlling financial activities of a company.
• It involves making financial decisions to achieve organizational goals.

Functions of Financial Management

• Project Management is NOT a function of financial management, it is a separate management discipline.
• Procurement focuses on acquiring goods and services for a competitive price and ensuring timely delivery.
• FP&A Specialists analyze financial data, create forecasts and budgets, and provide insights to guide strategic decisions.
• Tax is a major concern for all companies, regardless of size or location, as it relates to tax compliance and optimization.
• The Treasury Department manages cash flow, investments, and financial risks.
• The Risk and Compliance Function manages and mitigates financial risks and ensures adherence to regulations.
• A Finance Department manages both long-term and short-term monetary operations of a firm.

Finance Department Groups

• Accounts Payable is responsible for processing and paying vendor invoices.
• Accounts Receivable is responsible for managing invoices sent to customers and collecting payments.
• The Controller Group ensures the accuracy of financial records and prepares financial statements.
• The Budgeting and Forecasting Group develops budgets, financial forecasts, and performance analysis.
• The Expense Management Group manages all types of company expenses, not just travel-related ones.
• The Internal Audit and Compliance Group assesses financial controls, identifies risks, and ensures compliance with internal and external regulations.
• The Tax Function manages tax planning, compliance, and reporting for the company.

Treasury Management

• Treasury Management aims to optimize cash flow, manage financial risks, and maximize returns on investments.

Funding Sources

• The Payroll Group manages employee payroll, taxes, and benefits.
• Retained earnings are the profits that a company keeps rather than distributing to shareholders, making it a more established source of funding.
• Companies obtain Debt Financing by borrowing money from banks or issuing bonds to investors.
• Equity Capital represents ownership in a company, which can be raised through the sale of shares or through private investments.
• Companies can raise funds from the public through the stock market, but also through other methods like private placements.
• Private Equity Capital is sourced from private investors, venture capitalists, and other non-public entities.
• Donations, grants, and subsidies are examples of non-repayable sources that don't require a return on investment.
• Crowdfunding is a method of raising funds from a large number of people through online platforms.
• Donations are used for various purposes, including charitable donations, product development, and research, not just to boost revenue.
• Government Grants and Subsidies are designed to support specific projects, industries, or social causes.

Return on Investment (ROI)

• The primary goal of ROI is to maximize the financial return on an investment.
• Diversifying a company's investment portfolio is a common way to improve ROI.
• Tracking the right metrics helps measure business progress and performance, highlighting areas for improvement and adjustments.

Asset Management

• Using better tools can streamline processes, improve efficiency, and free up resources for strategic initiatives.
• Repurposing content for various platforms, like websites, social media, and marketing materials, can maximize its reach and impact.
• Analyzing competitors' marketing strategies can provide valuable insights into successful practices and avoid common pitfalls.
• Technological advancements, pressure from investors, and increasing competition are all drivers for effective asset management.
• Companies must consider the expectations of stakeholders, including investors, customers, employees, and society.
• Technological advancements have a significant impact on asset management, enabling data analysis, automation, and optimization.
• Cost reduction and resource optimization are crucial for achieving sustainable business models by maximizing value and minimizing waste.
• Extending the lifecycle of assets through maintenance, upgrades, and repurposing helps reduce costs, improve sustainability, and minimize environmental impact.