{"id":2947,"date":"2021-02-03T10:50:02","date_gmt":"2021-02-03T03:50:02","guid":{"rendered":"https:\/\/www.ireappos.com\/news\/?p=2947"},"modified":"2024-01-10T13:38:12","modified_gmt":"2024-01-10T06:38:12","slug":"financial-management-definition","status":"publish","type":"post","link":"https:\/\/www.ireappos.com\/news\/en\/financial-management-definition\/","title":{"rendered":"Financial Management : Definition, Functions, and Goals in Business"},"content":{"rendered":"<p><script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"NewsArticle\",\n  \"mainEntityOfPage\": {\n    \"@type\": \"WebPage\",\n    \"@id\": \"https:\/\/www.ireappos.com\/news\/financial-management-definition\/\"\n  },\n  \"headline\": \"Financial Management Definition, Functions, and Goals in Business\",\n  \"description\": \"Good financial management implementation is mandatory in every business. let's find out the definition, function, and purpose of financial management!\",\n  \"image\": [\n    \"https:\/\/www.ireappos.com\/news\/wp-content\/uploads\/2021\/02\/financial-management.jpg\", \n    \"https:\/\/www.ireappos.com\/news\/wp-content\/uploads\/2021\/02\/Definition-of-Financial-Management-According-to-Experts.jpg\",\n    \"https:\/\/www.ireappos.com\/news\/wp-content\/uploads\/2021\/02\/The-Purpose-of-Implementing-Financial-Management-in-Business.jpg\",    \n    \"https:\/\/www.ireappos.com\/news\/wp-content\/uploads\/2021\/02\/Financial-Management-Functions.jpg\"\n], \n  \"author\": {\n    \"@type\": \"Organization\",\n    \"name\": \"PT. Sterling Tulus Cemerlang\",\n    \"url\": \"https:\/\/www.sterling-team.com\/\"\n  },  \n  \"publisher\": {\n    \"@type\": \"Organization\",\n    \"name\": \"ireappos.com\",\n    \"logo\": {\n      \"@type\": \"ImageObject\",\n      \"url\": \"https:\/\/d2h87rbqc48mm2.cloudfront.net\/ir\/img\/ireappro-logo.png\"\n    }\n  },\n  \"datePublished\": \"2021-02-03\",\n  \"dateModified\": \"2021-02-03\"\n}\n<\/script><script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"FAQPage\",\n  \"mainEntity\": [{\n    \"@type\": \"Question\",\n    \"name\": \"What is the Definition of Financial Management?\",\n    \"acceptedAnswer\": {\n      \"@type\": \"Answer\",\n      \"text\": \"In simple terms, financial management is an effort to plan, manage, store and control company assets or funds. The implementation must also be done carefully so as not to cause problems in the future. Therefore, companies need the presence of qualified personnel and supporting equipment.\"\n    }\n  },{\n    \"@type\": \"Question\",\n    \"name\": \"What is the Purpose of Implementing Financial Management in Business?\",\n    \"acceptedAnswer\": {\n      \"@type\": \"Answer\",\n      \"text\": \"There are five main goals of the company when implementing financial management , namely:<\/p>\n<ol>\n<li><strong>Maintain smooth cash flow.<\/strong><br \/>\nThe first goal is to ensure that the company has a healthy cash flow. The application of financial management can monitor the amount of income or expenditure.<\/li>\n<li><strong>Improve the efficiency of the use of company finances.<\/strong><br \/>\nThe implementation of financial management, which in turn is closely related to efforts to increase the efficiency of the use of company funds.<\/li>\n<li><strong>Increase profit<\/strong><br \/>\nFinancial management can also be used when you want to achieve higher profit goals. You can get this condition by doing careful financial planning.<\/li>\n<li><strong>Capital structure planning<\/strong><br \/>\nThe use of financial management can also be used for the purpose of planning the company\u2019s capital structure.<\/li>\n<li><strong>Ensuring investment safety<\/strong><br \/>\nThe last objective is an effort to assess the level of safety of investment activities. <\/li>\n<\/ol>\n<p>\"\n    }\n  },{\n    \"@type\": \"Question\",\n    \"name\": \"What is the Function of Financial Management?\",\n    \"acceptedAnswer\": {\n      \"@type\": \"Answer\",\n      \"text\": \"Apart from having the objectives mentioned above, there are five important functions in the implementation of financial management by companies, namely:<\/p>\n<ol>\n<li>Estimated Capital Adequacy<\/li>\n<li>Assessing Capital Composition<\/li>\n<li>Choosing the Right Funding Source Options<\/li>\n<li>Cash Management<\/li>\n<li>Financial Control<\/li>\n<\/ol>\n<p>\"\n    }\n  }]\n}\n<\/script><br \/>\n<img decoding=\"async\" src=\"https:\/\/d2h87rbqc48mm2.cloudfront.net\/ir\/img\/financial-management.jpg\" alt=\"Financial Management, Definition, Functions, and Goals in Business\" title=\"Financial Management, Definition, Functions, and Goals in Business\"\/><\/p>\n<p>Every company needs to apply clear rules in every policy-making, especially if the decisions made are related to finance. For this one aspect, every company will apply strict financial management. The reason is, if financial management is not implemented properly, it can have an impact on the overall performance of the company.<\/p>\n<p><mark>Read also: <a href=\"https:\/\/www.ireappos.com\/news\/definition-of-management\/\"><strong>Definition of Management, Functions, Elements, Style, and Types<\/strong><\/a><\/mark><\/p>\n<h2>Definition of Financial Management According to Experts<\/h2>\n<figure id=\"attachment_2992\" aria-describedby=\"caption-attachment-2992\" style=\"width: 680px\" class=\"wp-caption aligncenter\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/d2h87rbqc48mm2.cloudfront.net\/ir\/img\/Definition-of-Financial-Management-According-to-Experts.jpg\" alt=\"Definition of Financial Management According to Experts\" title=\"Definition of Financial Management According to Experts\" width=\"680\" height=\"350\" class=\"size-full wp-image-2992\" \/><figcaption id=\"caption-attachment-2992\" class=\"wp-caption-text\">Definition of Financial Management According to Experts &#8211; pixabay.com<\/figcaption><\/figure>\n<p>In simple terms, <strong> financial management <\/strong> is an effort to plan, manage, store and control company assets or funds. The implementation must also be done carefully so as not to cause problems in the future. Therefore, companies need the presence of qualified personnel and supporting equipment.<\/p>\n<p>In addition, there are also several other definitions from several experts related to financial management, namely:<\/p>\n<h3>Harry G. Guthmann and Herbert E. Dougall<\/h3>\n<p>In the view of Guthmann and Dougall through a book entitled Corporate Financial Policy, financial management is an activity that is closely related to planning, developing, controlling, and administering any funds used in business.<\/p>\n<h3>J.F. Bradley<\/h3>\n<p>Meanwhile, J.F. Bradley has a different definition regarding the notion of financial management. In a book entitled Administrative Financial Management, Bradley reveals that financial management is an aspect of business management to regulate the use of company capital. Not only that, but the choice of sources of capital must also be considered in order to achieve goals.<\/p>\n<h3>Joseph L. Massie<\/h3>\n<p>A different definition is explained by Joseph L. Massie, author of The Essentials of Management. Massie said that financial management is a business activity that is responsible for obtaining and using company funds to achieve effective operations.<\/p>\n<h2>The Purpose of Implementing Financial Management in Business<\/h2>\n<p><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/d2h87rbqc48mm2.cloudfront.net\/ir\/img\/The-Purpose-of-Implementing-Financial-Management-in-Business.jpg\" alt=\"The Purpose of Implementing Financial Management in Business\" title=\"The Purpose of Implementing Financial Management in Business\" width=\"680\" height=\"350\" class=\"aligncenter size-full wp-image-2991\" \/><\/p>\n<p>There are five main goals of the company when implementing <strong> financial management <\/strong>, namely:<\/p>\n<h3>1. Maintain smooth cash flow.<\/h3>\n<p>The first goal is to ensure that the company has a healthy cash flow. The application of financial management can monitor the amount of income or expenditure. With monitoring, companies can anticipate so that cash flows are not negative.<\/p>\n<h3>2. Improve the efficiency of the use of company finances.<\/h3>\n<p>The implementation of financial management, which in turn is closely related to efforts to increase the efficiency of the use of company funds. You can not only carry out supervision but also eliminate expenses that are deemed ineffective and replace them with profitable activities.<\/p>\n<h3>3. Increase profit<\/h3>\n<p>Financial management can also be used when you want to achieve higher profit goals. You can get this condition by doing careful financial planning.<\/p>\n<p><mark>Read also: <a href=\"https:\/\/www.ireappos.com\/news\/how-to-calculate-the-selling-price\/\"><strong>How to Calculate the Selling Price of Your Product to Get Big Profits?<\/strong><\/a><\/mark><\/p>\n<h3>4. Capital structure planning<\/h3>\n<p>The use of financial management can also be used for the purpose of planning the company&#8217;s capital structure. Here, the company can adjust the capital composition to balance equity and debt.<\/p>\n<h3>5. Ensuring investment safety<\/h3>\n<p>The last objective is an effort to assess the level of safety of investment activities. That way, a corporate investment can provide positive returns.<\/p>\n<h2>Financial Management Functions<\/h2>\n<p><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/d2h87rbqc48mm2.cloudfront.net\/ir\/img\/Financial-Management-Functions.jpg\" alt=\"Financial Management Functions\" title=\"Financial Management Functions\" width=\"680\" height=\"350\" class=\"aligncenter size-full wp-image-2990\" \/><\/p>\n<p>Apart from having the objectives mentioned above, there are five important functions in the implementation of financial management by companies, namely:<\/p>\n<h3>1. Estimated Capital Adequacy<\/h3>\n<p>The existence of financial management enables a financial manager to estimate the company&#8217;s capital adequacy. Appraising the right estimate can increase the company&#8217;s income capacity.<\/p>\n<h3>2. Assessing Capital Composition<\/h3>\n<p>When the company has made an estimate, the next step is to determine the capital structure. This stage requires a short or long-term debt to equity ratio (DER) analysis.<\/p>\n<h3>3. Choosing the Right Funding Source Options<\/h3>\n<p>The next function is the decision to choose the source of company funding. Apart from equity capital owned by the company, there are several choices of sources of funds from third parties that can be obtained. Options for external sources of funds include issuing shares, bank loans or financial institutions, and debt securities.<\/p>\n<h3>4. Cash Management<\/h3>\n<p>Financial management also has an active role in the company&#8217;s cash management efforts. The existence of cash is very important because it can be used for the payment of salaries, monthly bills, liabilities, spending on raw materials, and so on.<\/p>\n<h3>5. Financial Control<\/h3>\n<p>The last function of financial management is to control the company&#8217;s finances. Many ways can be done as a control effort, such as financial forecasting, cost and profit control, ratio analysis, and so on.<\/p>\n<p><mark>Read also: <a href=\"https:\/\/www.ireappos.com\/news\/what-is-cost-of-goods-sold-cogs\/\"><strong>What is Cost of Goods Sold (COGS) and How to Calculate COGS<\/strong><\/a><\/p>\n<p>To help smooth the company&#8217;s <strong>financial management<\/strong>, there are many tools that you can use. iReap Pos is one of them, which provides the best solution for monitoring sales, profit, and inventory figures. The features in it also provide flexibility in monitoring company finances and can be done anywhere.<\/p>\n<p>If you&#8217;re curious, you can try the <a href=\"https:\/\/play.google.com\/store\/apps\/details?id=com.sterling.ireap\" rel=\"noopener\" target=\"_blank\">iReap Pos Lite application for free on the Google Play Store<\/a>. To be able to get more complete features, there is an option to use IREAP POS Pro. The subscription fee is cheap, you know! Only IDR 40 thousand per month.<\/p>\n<p><a href=\"https:\/\/www.ireappos.com\/en\/index.php\" rel=\"noopener\" target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.ireappos.com\/news\/wp-content\/uploads\/2021\/01\/banner-how-to-manage-your-store-with-iReap-POS.jpg\" alt=\"banner how to manage your store with iReap POS\" width=\"680\" height=\"150\" class=\"aligncenter size-full wp-image-2649\" srcset=\"https:\/\/www.ireappos.com\/news\/wp-content\/uploads\/2021\/01\/banner-how-to-manage-your-store-with-iReap-POS.jpg 680w, https:\/\/www.ireappos.com\/news\/wp-content\/uploads\/2021\/01\/banner-how-to-manage-your-store-with-iReap-POS-300x66.jpg 300w, https:\/\/www.ireappos.com\/news\/wp-content\/uploads\/2021\/01\/banner-how-to-manage-your-store-with-iReap-POS-20x4.jpg 20w\" sizes=\"(max-width: 680px) 100vw, 680px\" \/><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Every company needs to apply clear rules in every policy-making, especially if the decisions made are related to finance. For&hellip;<\/p>\n","protected":false},"author":1,"featured_media":9412,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[128],"tags":[],"_links":{"self":[{"href":"https:\/\/www.ireappos.com\/news\/wp-json\/wp\/v2\/posts\/2947"}],"collection":[{"href":"https:\/\/www.ireappos.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.ireappos.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.ireappos.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ireappos.com\/news\/wp-json\/wp\/v2\/comments?post=2947"}],"version-history":[{"count":0,"href":"https:\/\/www.ireappos.com\/news\/wp-json\/wp\/v2\/posts\/2947\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.ireappos.com\/news\/wp-json\/wp\/v2\/media\/9412"}],"wp:attachment":[{"href":"https:\/\/www.ireappos.com\/news\/wp-json\/wp\/v2\/media?parent=2947"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.ireappos.com\/news\/wp-json\/wp\/v2\/categories?post=2947"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.ireappos.com\/news\/wp-json\/wp\/v2\/tags?post=2947"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}