Up until the 1890’s, Financial Management was always an integral part of Economics. O’er the past few years, a comprehensive structure of Finance Function has started to act, ‘for and on behalf’ of corporate well-being, considering shareholder interests, to address one of the four vital components in management administration and risk processes, which have been financial decision-making. Thus, regardless of organization size/ type/ nature, the underlying purpose is to generate profits either by means of providing a product or service or both. The emerging role and essential requirement of Financial Management is the ability to generate Equity Capital for funding a set of administrative, operational, and investment-related functions to ensure businesses are sufficiently well-capitalized, for fulfilling business transformation projects and supporting innovations.
The objective and scope of financial management are therefore to allow administrators, decision-makers, key management staff to coordinate the strategic goals and priorities of the company with the planned business strategies that need to be executed through harmonizing, managing, regulating, organizing core economic and operating activities by efficient funds and cash flow management to achieve this objective.
This includes decisions on the acquisition/modification of current CAPEX programs, optimization of OPEX expenses, which could be situation-specific and include a mixture of analytical skills, capital budgeting strategies, knowledge of assets (physical and virtual) valuations, the know-how of contemporary budgeting methods and forecasting activities, and evaluating prospects for M&A; leveraging flexibility to improve operating efficiencies and management effectiveness under existing unpredictable and ambiguous macro-business environments and economic factors. However, there could be a significant probability of interruption of Top Line performance and Bottom Line growth both in the short and long term.
The current business environment is highly combative, challenging and puts significant demands on CFOs and Finance Leaders to reflect extensively and stay informed on issues relating to cost management and cost-saving measures, in addition, to evaluating an effective pricing plan that will explain the acquisition / retaining of consumers as part of the measurement/monitoring and appraisal of ongoing business.
Eventually, the financial stability of a company is determined by its willingness to produce enhanced shareholder equity and to follow it up with a clear and reliable commitment to improving its dividend payout strategy, regardless of market success, in order to augur ‘desired credit scores’ and stay ‘investor-centric.’
Thus, a blend of global management expertise, sound financial acumen, and a comprehensive outlook to identify business priorities to remain viable in the new dynamic global economic setting entails an inherent ability to predict how the actions of capital markets can impact immediate business plans and management outlooks in order to underpin the fact that knowing the concepts of financial management and the economic environment is still a bone of contention for modern companies.