Know the Purpose of Financial Management in Business – Nowadays more and more people are filling their spare time by doing business. Many people can open new businesses to be able to develop and become one of the successful businesses. Of the many ways that are done to develop and advance a business, one of the most influential ways is to do good financial management.
This aims to obtain many benefits, such as obtaining capital funds and assisting in the allocation of business taxes. However, not only that, the purpose of financial management also gives rise to the following benefits.
1. Monitor the use of funds
When funds are managed properly, they can be used effectively. The businessman will know what the funds are used for, how the cash flow of his business is, and the amount of debt and receivables.
Therefore, in this case, monitoring the use of funds can produce financial information that can be used as a benchmark in which direction the business will go.
2. Knowing the profit range in the next period
In the financial statements there is a recording flow that shows expenses and income. If financial management is carried out properly, business people will know the range of profits in the next period.
This profit information in the next period can certainly be used to make an allocation and funding plan for the following month. In addition, it can predict sales targets in the next period as well as the required business budget.
3. Means of knowing how optimal the allocation of funds is
The second objective of financial management is to determine whether the allocation of funds is optimal or not. If the allocation of business funds is carried out optimally, the business will develop for the better. If not, then business performance will decrease little by little.
So, with good financial management, business people will know how to manage sales results and profits every month to be more efficient.
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4. Assist with tax payments and reporting
The next purpose of financial management is to help with tax payments and reporting. In practice, reporting and paying taxes is sometimes difficult because of the many regulations and procedures that must be followed.
Therefore, financial management here aims to strengthen tax reporting to make it easier and more orderly.
5. Help determine the price
Setting prices is sometimes difficult to do, if you don’t have good financial management. Therefore, financial management must be carried out in order to help determine prices.
All of this can be obtained from business financial information that contains capital plans, sales targets, profits to the cost of spending on production materials.