Dr. Edgar Moreno
SILVA-NETTO, Reynaldine Kezia V.
August 2, 2014 Module #1: Financial Management
Financial Management is the process entrepreneurs use to put their numbers to work to make their businesses more successful. With a good financial management system, you will know how the business is doing financially. You will be able to use it to make decisions to improve the operation of your business. A good financial management enables you to accomplish important big picture and daily financial objectives. Importance of Financial Management:
Managing your cash flow is important so that you always have enough cash on hand to pay for rent, utilities, telephone, insurance, and supplies. This means you must look ahead and see when your accounts receivable are due and compare that to the due dates for your outstanding bills. Failure to effectively manage cash flows may result to unpaid expenses and you will find it difficult to keep your company operating. Lowering Expenses
Keeping costs as low as possible is one of the financial management responsibilities of the entrepreneurs. You can ask vendors for lower prices, reduce the number of employees you use, reduce energy use and purchase supplies in bulk. If you do not monitor and manage costs, your company will always have to increase sales dramatically to pay rising expenses.
If you manage your capital expenditures effectively, you will not overextend your company by borrowing too much for assets that don’t provide enough income to justify the expense. Tax Planning
Your financial management duties include planning for taxes. This involves making sure you have cash on hand to pay estimated tax payments each quarter and also timing your purchases of major assets to get the maximum benefit. Key Concepts of Financial Management:
1. Cash Management
2. Planning and Forecasting
3. Financial Reporting
4. Capital Structure
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