In order to be a great financial manager or business owner, financial management is key. There are many different facets to successful and sustainable financial management. Understanding your company in this way will allow you to not only plan for the future, but to also know what you have already accomplished in the past. This knowledge will allow you to see the light at the end of the financial tunnel and to continue to grow.
Many individuals ask about the difference between financial management and accounting. While there is some overlap between the two disciplines, they are not identical. Accounting involves the collection of information, presenting that information to management, and reporting statistics to be used in planning and organizing the business. Financial management deals solely with the movement of resources through a company. They are the ones who know where everything is, when it comes to finances, and how to get it done most efficiently.
When asking questions about financial management, you will likely want to find out how long the company has been around. No matter how small your company may be, if it has been around for more than a few years, it is probably time to consider changing course. As a company grows older, it tends to follow the trends set by larger companies. As well, financial management is needed for the avoidance of financial problems in the future. If a problem does arise, the manager knows what steps to take to keep the company running smoothly. This knowledge allows them to see the forest for the trees and to anticipate problems before they occur.
Knowing the size of your company is one of the first financial management questions you should ask. By knowing the size of your firm, you will be able to accurately answer any questions regarding the financial situation. This will help you determine whether or not you need to hire a financial consultant. There are three basic sizes of financial management firms; small, medium, and large. You will be able to quickly determine if your firm falls into any of these categories, based on how much money it brings in and how well it manages expenses.
You will also want to find out how well the company ensures that its financial management systems are effective.
- How well do they follow the guidelines set forth by the American Financial Services Association (AFSA)?
- Are there plans to update these policies?
- If so, what steps have they taken to implement them?
Learning as much as possible about your firm’s financial management system is important because it will help you learn what the company does to ensure that it is properly managed.
As a result of all this information, you will likely find that it is time to ask some financial management questions of your own. One of the first questions to consider is how the financial management works to ensure that all customers’ needs are met. What steps do they take to assist customers who are new to the firm and who may have a problem paying their bills? What steps are taken to make sure that people who work for the firm are not overcharged for services?
Of course, financial management questions will also focus on how well your business manages money. Are there ways to reduce costs and improve efficiency? For example, is the firm making use of current technology to help reduce paperwork? Can it streamline processes and increase productivity?
Finally, financial management questions will need to take into account the financial health of your firm. Are profits up or down? Is customer service up or down? Is employee turnover up or down? Knowing these things will help you learn what steps your business needs to take to ensure its financial health and success.