What Is Financial Management – Meaning & Functions?

It’s critical to handle your money wisely because resources are constantly limited. This is all what is financial management is all about. It is an essential task for maintaining any organization, especially if you are in charge of one. If your company doesn’t practice sound financial management, it can quickly run out of money to run its activities.

Businesses can ensure that no money is wasted through this management action. You will learn about the details of financial management’s functions in this article. Additionally, its significance will be revealed. Keep reading to know more!

What Is Financial Management?

Applying management principles to financial resources to improve their management is referred to as financial management. The ability to organize, direct, and manage an organization’s financial activities is a management competence. According to the definition, it has to do with raising money and using it wisely for business purposes.

Financial Management’s Responsibilities & Purpose

It is important to understand the roles that financial management plays. If you are pursuing finance courses then you must be aware of the same. Here are all the responsibilities that financial management plays.

  1. Planning and forecasting the finances

Financial managers must conduct financial planning as part of their duties. The value of the group of variables at some future time is estimated. It serves as a guide for future business operations. Financial managers must take a number of finance related things into consideration to do this.


  1. Money Management

Cash management is one of the duties of financial management. Decisions must be taken regarding how the money will be used. Financial managers determine if they want to invest in upkeep, pay off debt, satisfy present obligations, or make payments to creditors.

  1. Funds Acquisition

The acquisition of capital for a company’s operations is one of the duties of financial management. This includes selecting the funding sources. The company might use a variety of sources to raise money. Depending on the length of the financing, several sources of funding are used.

This includes, obtaining funding in place of equity by issuing an IPO to acquire funds from the general public and taking out loans from banking institutions

  1. Disposal of Extras

The financial manager must choose what should be done with the extra profit after investment and spending. They must choose whether the excess earnings should be paid out as dividends or reinvested in the company as retained profits. They are able to determine the dividend and bonus rates.

Financial Management Courses


Finance courses and financial management courses teach you how to effectively manage your financial resources both personally and within the framework of your business plan. Balance sheets are only one part of it. There are financial management plans and investment decisions in place, along with short- and long-term goals. You should have the knowledge of such things.

The capacity to consider the financial implications of their work is something that managers in a variety of functions can learn through financial training. They can gradually enhance their procedures in this way to cut expenses and boost productivity.

Conclusion :

In conclusion, financial management practice is a discipline that deals with monetary choices, such as short- and long-term organizational goals, and ensures that there is a high return on the invested money without necessarily taking on excessive financial risk.

In today’s time, having financial knowledge is equally important as any other thing. Make sure you gain some knowledge in this field in order to manage your own finances afterwards!