What is the importance of financial management in business?

What is the importance of financial management in business?

The Financial Management (FM) is generally concerned with procurement, allocation and control of financial resources of a concern. whenever we run any business or any organisation the most typical thing is to manage and maintain the finance and financial issues but it has its own benefits and importance, so the importance of financial management is being discussed below:

  • Financial Planning: FM helps to determine the financial requirement of the business concern and leads to take financial planning of the concern. Financial planning is an important part of the business concern, which helps to promotion of an enterprise.
  • Acquisition of Funds: FM involves the acquisition of required finance to the business concern. Acquiring needed funds play a major part of the FM, which involve possible source of finance at minimum cost.
  • Proper Use of Funds: Proper use and allocation of funds lead to improve the operational efficiency of the business concern. When the finance manager uses the funds properly, they can reduce the cost of capital and increase the value of the firm.
  • Financial Decision: FM helps to take sound financial decision in the business concern. Financial decision will affect the entire business operation of the concern. Because there is a direct relationship with various department functions such as marketing, production personnel, etc.
  • Increase the Value of the Firm: FM is very important in the field of increasing the wealth of the investors and the business concern. Ultimate aim of any business concern will achieve the maximum profit and higher profitability leads to maximise the wealth of the investors as well as the nation.
  • Promoting Savings: Savings are possible only when the business concern earns higher profitability and maximising wealth. Effective FM helps to promoting and mobilising individual and corporate savings.

so these are some of the points through which we can conclude that financial management is the most important element to run a business or any organization properly and to get better results.

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