What is finance management?
Finance management goes hand in hand with the annual accounts statements, where it is possible to look back on the past year and various key figures related to it. It is also known as management accounting.
With finance management, however, the company tries to look forward, anticipate the economy, and move it in the desired direction. It is about managing the economy in a particular direction using knowledge from key figures, budgets, and other tools to manage the company’s finances, activities, capacities, and liquidity.
You can get bookkeeping-ready data with Acubiz
With Acubiz, you can get bookkeeping-ready data for your company’s accounts and optimize your finance management to ensure more significant growth.
In short, it outlines how the company can optimize its processes, such as earning more money, streamlining costs, ensuring better liquidity, turning goods faster, or similar.
Since companies plan ahead, finance management is based on forecasts, budgets, and calculations. They are some cornerstones and a prerequisite for successful financial management.
The four key concepts of finance management
There are four following key concepts and areas that are worked from within finance management:
- Activity management
- Liquidity management
- Capacity management
- Finance management
Below you can get more knowledge about each individual key concept.
Activity management involves matching markets and products. Here, you should try to best utilize market opportunities by selecting and developing the products, services, or services that provide the greatest earnings.
Liquidity management is about having an overview of how many liquid assets the company has to work with now and in the future. You should also look for the possible uses of liquid assets to create financial advantages and optimize the company.
This involves, for example, assessing the company’s short-term financial situation, including its cash holdings, cash flow, and debt obligations.
Capacity management is about the efficient utilization of resources. It can be labor, machinery, facilities, and much more.
How effectively are resources being utilized, and where can optimization be made to reduce expenses and thereby increase profits? Good capacity management is important because it can help ensure that resources are used efficiently. It also shows whether a company is able to meet the demand for products or services.
Finance management is about utilizing the company’s capital. It’s about predicting future capital and planning how it can be used optimally. Should the company invest in a new assembly line, machinery, buildings, acquisitions, or other things?
Effective finance management can help ensure a company has sufficient financial resources to meet its obligations and grow.
Examples of tasks within financial management
The employee responsible for financial management in a company will typically deal with several types of tasks where all four of the above key concepts are involved.
Here are typical examples of tasks related to financial management:
- Registration – for example, recording costs, revenues, expenses, and investments in the company.
- Reporting – for example, a quarterly report on the company’s processes and results.
- Control – for example, of a company’s activities and processes.
- Planning – for example, indicating a direction for a company to improve its finances.
Do you want to know more?
All in all, financial management or management accounting is about planning the company’s forward-looking financial action plan.
Excellent and effective financial management also leads to a better financial starting point because the company can make well-informed decisions about handling financial resources in the future and achieving the desired goals.
With Acubiz, you can ensure the digitization of processes related to expenses and receipts so that your bookkeeping is done correctly when you need to create your annual report and get started with financial management.
What is finance management?
Finance management refers to the process through which companies plan, organize, execute, and monitor financial activities. The purpose is to achieve the company’s financial goals and ensure financial stability and growth.