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Financial Management Methods

Finances are the ones in charge of establishing methods of managing money. It can be referred to personal methods or corporate ones. According to Wikipedia, “finance studies and addresses the ways in which individuals, businesses and organizations raise, allocate and use monetary resources over time, taking into account the risks entailed in their projects.”

If finances are well-handled, successful results can come out from the incomes and outcomes made. A good financial management will certainly lead to the business success, and for this, certain steps must be followed in the process. Usually, financial management can be processed in 4 different ways: budgeting, safeguarding, monitoring and auditing.

In plain terms, budgeting refers to the correct balancing between incomes and outcomes by previously planning forecasts and strategies of expenditures. Safeguarding concerns about the insurance of the goods possessed. With this method of financial management, certain controls are set to guarantee the safety of incomes, assets, capital, equipments and motor vehicles and not put in risk of damage, misuse, theft or loss.

Monitoring process is also known as Financial Reporting. It is pertaining to the continuous checking of the actual income and outcomes, so that they can be compared to the budget later; proceeding to correct and report any action when required. Auditing or Accountability is the method in which financial statements are audited by the person in charge, and all the financial results are reported to all stakeholders.

No matter if it is a small or a big company, the people in charge of managing the accountings must be responsible and reliable. Moreover, they must have the capability to ask any question that may come up and to make all the necessary recommendations to the respective authorities. Financial managers must strive to find brand new ways to generate incomes, to prevent corruption, to keep costs down and to safeguard the institution’s assets.

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