Solid Financial Management For A Company To Create A Long-Term Vision And Reap Rich Dividends
Creating a business plan that helps the VP or CFO of a company to frame a long-term vision. All departments will follow this plan and adhere to it to achieve success. It provides data to create a long-term vision, decide where to park funds, how to mobilize funds, and ensure cash flow, profitability, and liquidity.
Finance teams can use ERP (Enterprise Resource Planning) software to accomplish these stated goals. The software integrates various financial functions like fixed asset management, accounting, payment processing, and fixed asset management. Therefore, financial management which integrates all these components allows real-time visibility into the company’s financial state.
In strategic financial management (FM), the finance manager manages the company’s finances besides focusing on achieving long-term objectives, goals, and enhancing shareholders’ value. The main aim is to create profits in the long run for a business.
The financial expert at Joseph Stone Capital helps to achieve financial management by establishing financial plans for the business, ensuring financial controls, and making sound financial decisions. You need to define business objectives, identify available financial resources, and make a plan to utilize them effectively for the business. It also involves monitoring accounts receivables, payables, expenditures, cash flow, and expected dividends. On the other hand, tactical financial management focuses on short-term positioning.
Functions in FM
It can be classified into the Capital structure, capital budgeting, and working capital management. The Capital structure allows a financial manager to pay for the operations and accomplish growth. It could be wise to choose a debt option if the interest rates are low. You can also mobilize funds through private equity for long-term goals. The fund managers at Private Equity Fund also contribute expertise like technical experts, financial decisions, market research to grow your business. You can also mobilize funds by selling equity or divesting non-profitable assets etc.
Capital budgeting refers to creating a business plan, estimating the capital required to achieve the desired business objectives like new product development, sourcing of raw materials, semi assembly kits, establishing new plants for the production, implementation of systems, etc. It concentrates on achieving short-term and long-term objectives.
Working capital management focuses on providing capital for daily operations like the purchase of components for production on a cash purchase basis or from established suppliers, paying for workers, transporters, taxes, and other expenses. You can seek the help of Joseph Stone Capital for the financial management of your company for a small fee.
A finance management example
A company decides to introduce medical products like hearing aids. The management calls the teams like design team, planning team, marketing team, purchase team, production/ QA teams to estimate the capital required for design, equipment required for production, testing, and quality checks, purchase of raw materials, production, quality assurance, and marketing of the products.
You need to pay a design fee for the design and development of a hearing aid. It needs to be tested and evaluated before deciding to purchase components for large-scale production. The company funds purchases on achieving a successful design. The next process is to produce the products and supply samples to customers, measure feedback, and make changes in the design to suit customer requirements. In this phase, you need a production line for bulk production. All these tasks involve the effective working of a finance professional to manage the funds, source low-cost funds, establish finance control, and reap rich dividends for the shareholders.