What is corporate financial management?? What function does the business have? Financial management is currently the work item that is most interested by business leaders, because it helps to better manage all business activities of the enterprise. Let's learn about this field in the article below!
What is corporate financial management?
Enterprise Financial Management is the most important work item for anyone who holds the position of management and business leader, because this job, if done well, will not only help businesses find a way to maximize profits, but also It even helps businesses develop more effectively.
So understand What is corporate financial management?
Enterprise Financial Management (Financial Management) is a concept in economics, used to refer to the work of planning, organizing, directing, controlling, etc., all activities related to the financial affairs of an enterprise, such as: using financial funds. , investment, cost of importing raw materials, costs of paying staff salaries, etc. during the operation and operation of the business.
The work of corporate financial management will be the work that the finance and accounting department must perform and periodically report to the corporate finance manager, or to the business leaders themselves.
Find out what is the concept of corporate financial management
Objectives of financial management activities
Financial management activities for all companies and enterprises is one of the most important issues, directly affecting the existence, stability and development of the business.
So the goal of What is corporate financial management? The goals of the basic financial management job in every business can be divided into two categories:
Short-term goal
To manage and control all sources of revenue and expenditure of the enterprise, to ensure that the enterprise always has enough capital to operate and operate in the future, to meet all spending goals, to ensure the ability to receive investment, pay staff salaries… ensure to control spending in accordance with the financial plan set out in each period.
Long-term goals
Determining the current revenue and expenditure level of the business that can develop in the long-term, thereby proactively building new orientations and solutions to increase profits, increase capital, have a reasonable spending plan, allocate capital sources for appropriate projects, directly affecting the upcoming operational strategies of enterprises and companies.
7 main functions of corporate financial management
Financial management is an extremely important part of the corporate governance function, and is closely related to many other functions of the business such as production management, marketing management, human resource management.
Main function What is corporate financial management? Includes the following 7 functions:
Estimated spending needs
Administration Department business Finance will need to continuously plan, monitor, control and report the revenue and expenditure of the business when operating, based on data from other departments.
Thereby, businesses can determine the profit level of the previous week, month, quarter, or the project being implemented to estimate for future projects and activities.
Determine the capital composition
When the enterprise has determined the spending situation in future projects and activities, it will be possible to determine the capital composition, which comes from two sources: assets of the business owner and investment funds. from partners.
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Choose a source of capital
To increase capital for the company, the management will need to have a plan to increase capital in many ways, such as:
- Issuing stocks and bonds.
- Increase loans from banks, financial enterprises
- Calling for investment from potential large and small investors at home and abroad
- Bonds can be loaned to raise capital.
How to invest?
When identifying and understanding existing capital sources, enterprises will choose investment projects, develop potentials, suitable, bring the best profits, and ensure safety when investing for businesses, to project development orientation.
Throw away the surplus
Surplus value with a business is the difference between the amount of capital invested and the amount received after a certain investment period, which can be understood as investment profit. This is also an extremely important function in corporate financial management to know.
The surplus value of the business will come from 2 sources:
- Expanding plans, investment markets, diversifying products and services of the company.
- Determine stock ratios and get benefits from them.
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Cash Management
In addition to spending and capital figures, cash is also an item that the financial management department of the business needs to always monitor and control, so that the business can make decisions and strategies. business strategy in line with the current financial and monetary situation.
Usually, the cash expenditures of businesses will be: electricity and water bills, money for organizing internal company activities, advertising rentals, printing rentals, etc.
Accurate and clear financial control
It is not possible to only care about financial issues for future plans, businesses need to pay more attention to the current financial control of the company, the business is very clear, detailed and accurate. Such as:
- What are the current expenses? how much?
- What revenues are there? What is the number? Earn from where?
- What is the difference between revenue and expenditure?
Learn more: Corporate financial management functions
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Degrees of corporate financial management
Different degrees of What is corporate financial management? Includes 3 levels as follows:
- Rough level: The main purpose is for businesses to manage financial invoices and tax reports, using excel tools.
- Basic level: the person in charge will periodically once a week, a month will submit to the business leadership all financial reports, details of revenue and expenditure, profit from sales, etc. business, using excel tool.
- Advanced level: has its own financial management department, every month, once a quarter, ... will submit financial analysis and general financial reports corresponding to all establishments and branches to the intranet system, mobile device (cloud/mobile).
So that leaders everywhere can also access and understand the business situation remotely. This level of management can quickly process extremely large amounts of data and statistics, and has almost absolute information security.
At this level, businesses are required to use specialized accounting and financial management software to work more efficiently, quickly and accurately.
5 principles of effective corporate financial management
Effective principles to follow when implementing What is corporate financial management?, includes the following five principles:
- Reorganize financial resources for detailed, clear, scientific and systematic, regular monitoring of loans
- Good balance between revenue and expenditure
- Use existing money effectively to create more profits
- Balance risk and performance, return
- Always have a backup plan to minimize bad situations, such as savings, insurance, loss reserve fund, etc.
Tools used in financial management
Tools used to What is corporate financial management?, Here are 7 tools that are used a lot in corporate financial management (According to the Journal of Accounting & Auditing Re-statistics):
- Institutions, regulations, rules on corporate management and financial management.
- Have long-term and short-term plans on the financial situation of the enterprise and revenue and expenditure estimates.
- Monetary, valuation, economic and financial instruments relevant to the business.
- Economic leverage
- Financial analysis
- The system allows internal control
- An intuitive information system about the economic and financial situation
Effective corporate financial management with CoffeeHR
The most effective plan with What is corporate financial management?
Currently, many businesses have applied a new financial management method to catch up with the 4.0 technology development trend, which is to use Business Administration Software, in which CoffeeHR software is the most effective solution to help businesses improve their business performance. Vietnamese enterprises manage their finances, and at the same time control many other areas to ensure the best operation of the business.
CoffeeHR is a business management software that applies the HRM On Cloud solution suite with many improvements, currently a financial and human resource management solution for many corporations, large and small businesses in Vietnam.
CoffeeHR helps businesses control issues: Organizational Administration, Financial Management, Recruitment, C&B, Training, Evaluation, Human Resources Services.
With many advantages, supporting businesses for many jobs, such as: salary calculation, payroll, recruitment organization, electronic reports, including many jobs from Employee and Leader, both Digital Signatures, Invoices electronic,…
Especially, it allows storing large volumes of data with absolute security, can be easily linked with many other software that businesses are using to support management.
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The article presented information about What is corporate financial management? along with a lot of related information, hopefully providing you with a lot of useful knowledge.
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