The assessment of economic management as a distinct management discipline is relatively recent and linked to changes in business and socio-economic scenarios, which are made by the development of computer and information technology, the emergence of multi-product and multi-division corporations with complex and dynamic. organizational set-ups, increasing global competition etc.
Money, without a doubt, is an essential part of any business, and traditionally the role of a financial manager (known as accounts or accounts manager) has been limited to managing financial affairs or counting beans. However, the discipline of financial management differs greatly from its traditional functions and extends to more inclusive functions of “growing the beans”.
The role of the financial manager can be best understood by breaking down the definition of financial management. According to Prof. Bradley, “Financialmanagement is the area of managing a business, using the judgment of capital and use. The careful selection of sources of capital, such as unit cost he can move to achieve his goals which mimics the role of a financial manager.
Are:
– Financial management is a distinct area of business management – financial manager i.e. plays a key role in overall business management
– Prudent or rational use of capital resources – proper allocation and use of funds
– Careful selection of the source of capital – Determining the debt to equity ratio and designing the proper capital structure of the body.
– The attainment of the goal – The objectives, namely the achievement of the objectives of the business. wealth or profit maximization.
The essential objective of financial management can be divided into two broad categories of functions – recurring financial functions and non-recurring or episodic financial functions – to define the role of the financial manager.
– Performing regular financial functions in the financial sector including assessing the demand for funds, identifying and transferring funds, allocation of funds and revenues and controlling the use or use of funds to achieve the primary goal of profit/wealth maximization.
– Preparation of non-recurring tasks, although not exclusive, financial preparation plans at the time of business promotion initiative, financial equity in the liquidity crisis , the evaluation of the enterprise at the time of merger or reorganization and other such episodic activities with large financial implications.
In this regard, it should be noted that without the exception of jurisdiction, any business decision, especially one of strategic importance, cannot be defined unless the financial implications have been evaluated. This extends the role of the financial manager to other areas of business management and suggests its importance in overall business management.
Financial Manager Vs. Traditional Accountant
Traditionally, the management of financial affairs was done by accountants, who were specialized in reporting and organizing financial affairs and were rarely involved. deciding The accounting function was also inherently paper-based and human resources intensive, and accountants more or less functioned as clerks. However, recent developments in information technology, combined with the competitive pressures of globalization and the body have to drink. they radically changed the accounting and financial role from clerical to a more analytical and advisory role. As computers started functions the essentials of an accountant – recording and organizing financial data – incredible diligence, the role of accountant in business organizations from financial stalls they are replaced by those who are not only capable of analyzing financial data, but also of developing strategies and implementing the long-term goals of their organization.
According to a study conducted by the Institute of Management Accounting (IMA) in 1996, the management accounting profession made a transition after the mid-1980s; and today in accounting management are more and more required for their traditional accounting procedures, which are combined with accounting and financial reporting, with more financial analysis and management consulting functions of strategic planning, short-term budgeting process, and internal consulting. The IMA study describes this shift as “…shifting from number cruncher and corporate cop to specialist decision support”. [The Practical Analysis of Management Accounting, 1996].
Thus, in the current context, the financial manager plays several important roles in creating and maintaining the financial management of an effective and successful organization, including:
a) Safeguards in the cost-effective use of the financial resources of the government, using effective general and financial management practices;
b) Being actively involved in organizational decision-making, providing timely and reliable financial and performance information and analyzing the implications of this information in relation to achieving the goals and objectives of the organization; and
c) We must ensure that government resources are protected from waste, fraud, and abuse by improving our accounting system and internal controls.
Since the traditional accountant is essentially focused on the first and last part, the economist in his new role is more and more required to be the second – a strategic business partner in organizational decision-making. He emphasized the need to study managers such as healthy interpersonal and communication skills, enterprise perspective, overall organizational knowledge and strategic initiatives for new supporting roles, in addition to financial expertise and tools of advanced knowledge of financial management to support their traditional role.
