The speech on financial management is important seeing that it gives an in-depth analysis of financial management, why it is crucial, and some of the concepts of financial management. The speaker does a great job in introducing his topic which can be summed up to define financial management as the supply chain management that focuses on ratios, equity, and debt. In other words, financial management refers to the management of organizational funds in such a manner that allows for the accomplishment of the organization's set objectives (Langfield-Smith et al. 2017) . This applies to the organization's financial strategy to fund its operations in the supply chain and broadly includes how firms raise capital by highlighting the various means therein such as contributions and loans, and how this money is allocated to the multiple departments or chains of supply through what can be termed as capital budgeting.
The speaker then goes ahead to expound on the importance of financial management for any organization. He points out that financial management plays a significant role in financial planning since it helps in determining the financial requirements of the organization and leads to take a financial plan of the concern. Secondly, it helps in the acquisition of funds. This is because financial management in itself involves the acquisition of required finances to the organization. Thirdly, financial management plays a role in advocating for the proper use and allocating of funds which leads to the improved operational efficiency of an organization. Financial management advocates for the appropriate use of funds thereby reducing the cost of capital and increases the value of the business (Theriou, 2015). Lastly, financial management helps the company take sound financial decisions regarding the business's operations. Financial decisions affect the entire business operations since there are direct relationships within various departments and their functions, such as marketing, production, and sales.
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Cash Management is a goal of cash management ensuring that business enterprises have the resources they need to meet their financial obligations and that this is done on time. Cash management is critical in ensuring that there are no cash deficits compared to what the business forecasts since this can cause severe financial harm to the organization's image and operations. The second concept is Planning and Forecasting which involves accurately forecasting an organization's revenues, expenses, and resulting net profit. The focus, also called the budget, is a critical tool when making management plans. Significant variances to forecast indicate either directly or indirectly, that the business environment and general performance in the marketplace are performing towards the realization (Karadag, 2015). Analyzing these variances focuses the organization's attention on changes that need to be made on the business strategies and operations to ensure the company gets back on its course as far as the organizational goals are concerned.
Financial Reporting as a third concept deals with how a business requires timely and accurate reports to make decisions of running the company effectively. This concept emphasizes on the financial management team being able to determine the critical pieces of information the company needs for decision making. The team designs reports providing this information in a format that is most useful to the organization. Lastly, Capital Structure deals with obtaining outside capital as startup capital, or additional infusions of money needed to fund an organization's expansion plans. This financial management concept is critical in determining the best form of capital required, for either starting a business or expanding it, how much of the said capital is needed, and how to go about acquiring it (Brigham & Houston, 2012). Large companies with more stable cash flow could borrow funds from financial lending institutions as opposed to giving up on equity shares to the investors.
References
Brigham, E. F., & Houston, J. F. (2012). Fundamentals of financial management . Cengage Learning.
Karadag, H. (2015). Financial management challenges in small and medium-sized enterprises: A strategic management approach. EMAJ: Emerging Markets Journal , 5 (1), 26-40.
Langfield-Smith, K., Smith, D., Andon, P., Hilton, R., & Thorne, H. (2017). Management accounting: Information for creating and managing value . McGraw-Hill Education Australia.
Theriou, N. G. (2015). Strategic Management Process and the Importance of Structured Formality, Financial and Non-Financial Information. European Research Studies , 18 (2), 3.
