Objectives of Financial Management: Key Goals and Strategies

Financial management plays a significant role in any business success. From operations to managing cash flow, it is an unavoidable need of a business.  Financial managers help to create a short-term & long-term vision of a company. They play a key role in deciding the amount of capital investment. The financial manager’s responsibility is to help with accounting, revenue generation, and processing of payments.

Financial management helps to see a clearer picture of the financial health of a business. It reflects on the financial path & suggests changes accordingly. At times, in need of extra funds, personal loans in Pune are your saviour. These loans are available at low interest rates with flexible tenure. According to The Times, major financial goals for 2024 should vary from clearing debt to achieving financial security.

For example, Sasha is the owner of a fashion boutique in Sainik Farms, Delhi. She wants to expand her business to Mumbai. For this, she needs detailed analysis of her business’s financial health and market trends. Hiring a financial manager could solve her problems, as they are trained in problem solving. A financial manager would help her with budget allotment and building a vision that is realistic and aligns with her goals.

Objectives of Financial Management

Financial management is built on various pillars; the most important are the financial managers. Financial managers are associated with numerous responsibilities related to finance. Let us understand them further:

All of these objectives are essential in promoting the business. Effective principles of management help to build a firm financial structure. 

Key Goals of Financial Management

As mentioned before, financial management is an indispensable part of a business. The three fundamental steps of financial management are as follows: 

• Strategising a solid plan

Financial managers identify the financial situation of a company. Based on the analysis, they define the short- and long-term goals. Lenders make sure to check the current performance to estimate your ability to repay the loan. 

• Decision-making

Financial managers are responsible for making sound decisions. These decisions must promote business to increase profit. Financial managers work together with business leaders to find the best path to execute plans. They provide updated financial reports & relevant data on key performance indicators (KPIs). 

• Controlling

The financial managers ensure team building. They contribute to creating a vision working on the profit maximisation of a company.

Financial managers operate within the budget allotted and in line with strategy alignment. With effective financial management, you have an idea of where the company is headed to progress. 

Kinds of Financial Management

There are three broader types of financial management. These are stated as follows:

• Capital budgeting

1. Financial managers assessing the financial situation of the company help to allot budget.
2. The financial managers decide on short- and long-term goals.
3. After market analysis, financial managers suggest where to invest to promote maximum growth.

• Capital structure

1. Financial management includes the structure to pay for working operations.
2. An organisation seeks funds from a private equity firm. Selling assets such as real estate is an easy option there.

• Working capital management

1. Adequate capital must be present in the organisation, ensuring smooth operations.
2. Financial managers take care of activities like paying workers, purchasing inventory, etc.

The conclusion

In a nutshell, financial management includes processes from planning to execution. A sound team of financial managers is the backbone of a successful company. Financial managers regulate activities like capital investment while developing a vision for profit maximisation. Financial management focuses on automating complex financial processes. They assess and analyse market trends, then develop strategies to promote business growth.