What is the advantage of Finance Operation Manangement?

 

 

Financial management is important mainly because it helps to make decisions towards the maximization of value of the firm . The importance of financial management to a firm are as follows:

1. Financial Management Helps Setting ClearGoalClarity of the goal is important for any firm. Financial management defines the goal of the firm in clear terms (maximization of the shareholders wealth). Setting goal helps to judge whether the decisions taken are in the best interest of the shareholders or not. Financial management alsodirect the efforts of all functional areas of business towards achieving the goal and facilitates among the functional areas of the firm.2. Financial Management Helps Efficient Utilization Of ResourcesFirms use fixed as well as current assets which involve huge investment. Acquiring and holding assets that do not earn minimum return do not add value to the shareholders. Moreover, wrong decision regarding the purchase and disposal of fixed assets can cause threat to the survival of the firm. The application of financial management techniques (such as capital budgeting techniques) helps to answer the questions like which asset to buy, when to buy and whether to replace the existing asset with new one or not.The firm also requires current assets for its operation. They absorb significant amount of a firm'sresources. Excess holdings of these assets mean inefficient use and inadequate holding exposes the firm into higher risk. Therefore, maintaining proper balance of these assets and financing them from proper sources is a challenge to a firm. Financial management helps to decide what level of current assets is to be maintained in a firm and how to finance them so that these assets are utilized efficiently.   3. Financial Management Helps Deciding Sources Of FinancingFirms collect long-term funds mainly for purchasing permanent assets. The sources of long term finance may be equity shares, preference shares, bond, term loan etc. The firm needs to decide the appropriate mix of these sources and amount of long-term funds; otherwise the firm will have to bear higher cost and expose to higher risk. Financial management (capital structure theories) guides in selecting these sources of financing.4. Financial Management Helps Making Dividend DecisionDividend is the return to the shareholders. The firm is not legally obliged to pay dividend to the shareholders. However, how much to pay out of the earning is a vital issue. Financial management (dividend policies and theories) helps a firm to decide how much to pay as dividend and how much to retain in the firm. It also suggests answering questions such as when and in what form (cash dividend or stock dividend) should the dividend be paid?The importance of financial management is not limited to the managers who make decisions in the firm. Proper financial management will help firms to supply better product to its customers at lower prices, pay higher salary to its employees and still provide greater return to investors.      

Financial management of your small business encompasses more than keeping an accurate set of books and balancing your business checking account. You must manage your finances so you don’t overspend and so you remain prepared for all expenditures, as well as profit distributions. Your financial management responsibilities affect all aspects of your business. A company that sells well but has poor financial management can fail.

  Capital Expenditures

You purchase assets to create income. All your financial considerations of capital expenditures must balance the amount of income the asset will produce with the amount it will cost. 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.

Operating Cash

You must manage your cash flow so you always have enough on hand to pay for rent, utilities, telephone, insurance, payroll 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. You can manage your cash flow by shortening the amount of time you give customers to pay and by renegotiating due dates with vendors. If you fail to manage cash flow effectively, you may not be able to pay expenses and keep your company operating.

Lowering Expenses

One of your financial management responsibilities is to keep costs as low as possible. 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.

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. For example, if you know your current tax year will not require a heavy tax payment but next year will, you can postpone buying major assets until next year when you will need the tax write-off more. Failure to plan for taxes and maximize deductions can cause your company to spend more than it has to on taxes.

 

The Finance Operations services are designed for organizations that want to optimize their finance function, drive business outcomes, and shift the finance organization to become a strategic partner for driving the organization’s growth. The advantages of Finance Operation Management is to improve and help clients the efficiency and accuracy of forecasting, planning analyzing close and financial reporting processes, ultimately enabling the focus to shift to higher value activities for driving business growth. It also helps in enterprise performance management to provide clients with actionable information and robust tracking capabilities to manage corporate performance, enhance management reporting and improve decision making for driving growth while streamlining the budget, planning and forecasting processes. It also helps improved the finance organization efficiency to increase the value of the financing.

 

Operation management ensures that an organization is conducting business at peak efficiency and ability. Operation management includes the development and use of resources that are necessary for a company to deliver goods and services to its customers. 

Operation management professionals deal with a wide range of responsibilities. This includes designing products and managing their development, as well as handling supply chain concerns. In the manufacturing industry, the operation management team will also be responsible for determining the location and size of manufacturing facilities, as well as the structure of supply chains. It can also include tactical elements such as how projects are managed within the organization and the selection of specific equipment.

Finance Operation Management is to get to optimize various resources and functions of the company in order to win a competitive advantage at least on the cost side towards competition.

Managing the financial activities of an entity us called financial operation management.

Advantage 1. one have clear picture of financial position of the entity. 2. If the financial operation are being manged the result is you can make decision on its behalf so it is helpful in decision making i.e wither to grow or keep concentrate to the current status etc 3. With this , the transparacy can be kept very easily when all figures will be in front of your eyes. 4. With the managment of financila operation the result will be you will be fully aware of weither theres profit or loss. 5. last but not the least is PEACE OF MIND......

I hope that I understand the question well and thank you for the invitation • Financial Management as a science: the study group concerned with studies of the best ways to get the funding and the best ways to use this money in order to achieve the main objective of businesses and is to maximize the market value of Mnchahaa that art and science that respect management of funds. Where the word means is learned that there are some opportunities to show the skills and creativity in money management, but the word of science it means that there are some proven facts and based on the guideline principles and theories and concepts with regard to financial decision in the money management

• Financial Management as a function of: an activity carried out by the administrative unit in order to get the money and the optimal use of these funds in order to achieve the desired objectives of any AHA decision-making process relating to access to money as the best and invest this money efficiently so as to maximize market value range the company or maximize shareholder wealth and thus contribute to the ultimate goal of the company and is to stay and grow and continue. This means that the function of financial management concerning the management of the company's investment portfolio are maximizing the return on these investments at an acceptable level of risk, and the financing of these investments are appropriate mix of funding sources in the form that leads to lowering the cost of capital to kept to a minimum

• Financial Management unit management: a group of people who Iqmon Atniv and business activities related to access to money and use this money to achieve the desired goals

- Since "Operations Management", as an activity is defined  generally, as all those functions that perform the multi-activities  in any organization, including planning, organizing, leading and controlling of available resources in order to produce or create the required, desired value add output (goods or services) with the maximum efficient and innovative level, consequently the effective Financial Operations Management is mainly generating the following four types of advantages to the business:

1- Reducing the amount of "invested capital" necessary to produce / create the output (goods and services) by effectively use of available resources.

2- Providing the basis for innovation by building solid basis of operations system and procedures.

3- Reduce the cost of output (goods or services) by being efferent, through management information system, cost analysis and other financial control sub- systems..

4- Increase revenues via increasing the customers satisfaction through raising the output quality and after selling services.

 

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