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Financial management is thebusiness function concerned with profitability, expenses, cash and credit. These are often grouped together under the rubric of maximizing thevalue of the firm forstockholders. The discipline is then tasked with the "efficient acquisition and deployment" of bothshort- andlong-term financial resources, to ensure the objectives of the enterprise are achieved.[1]
Financial managers[2] (FM) are specialized professionals directly reporting tosenior management, often thefinancial director (FD); the function is seen as'staff', and not'line'.
Financial management is generally concerned with short termworking capital management, focusing oncurrent assets andcurrent liabilities, andmanaging fluctuations in foreign currency and product cycles, often throughhedging.The function also entails the efficient and effective day-to-day management of funds, and thus overlapstreasury management.It is also involved with long termstrategic financial management, focused on i.a.capital structure management, including capital raising,capital budgeting (capital allocation between business units or products), anddividend policy;these latter, in large corporates, being more the domain of "corporate finance."
Specific tasks:
Two areas of finance directly overlap financial management:(i)Managerial finance is the (academic) branch of finance concerned with the managerial application of financial techniques;(ii)Corporate finance is mainly concerned with the longer term capital budgeting, and typically is more relevant to large corporations.
Investment management, also related, is the professionalasset management of varioussecurities (shares, bonds and other securities/assets).In the context of financial management, the function sits with treasury; usually the management of the various short-term financiallegal instruments (contractual duties, obligations, or rights) appropriate to the company'scash- andliquidity management requirements. SeeTreasury management § Cash and liquidity management andChief Investment Officer.
The term "financial management" refers to a company's financial strategy, whilepersonal finance orfinancial life management refers to an individual's management strategy. Afinancial planner, or personal financial planner, is a professional who prepares financial plans here.
Financial management systems are thesoftware and technology used by organizations to connect, store, and report on assets, income, and expenses.[4]SeeFinancial modeling § Accounting andFinancial planning and analysis for discussion.
The discipline relies on a range of products, fromspreadsheets (invariably as a starting point, and frequently in total[5]) through commercialEPM andBI tools, oftenBusinessObjects (SAP),OBI EE (Oracle),Cognos (IBM), andPower BI (Microsoft).SpecialisedFP&A products are provided byJedox,Anaplan,Workday,Hyperion,Wolters Kluwer,Datarails, andWorkiva.
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