Every business or any organization needs finance to continue as well as to grow. Finance in non-technical language is fund or money. The amount of finance that is required, the cost at which it is to be attained the type or source of finance that is debt financing or equity finance. Both these sources are attainable but both of them have their own pros and cons. There are many aspects that are to be kept in mind before the choice of capital is made. These aspects are responsible for the future of the business. If the decisions are not taken without proper planning and considering the financial position of the company, the pros and cons of the source of finance and the impact on long term basis, then the business might have very serious repercussions, that cold even lead to their liquidation or bankruptcy.
Financial management refers to the process of efficiently using the economic resource namely money. For money to be used efficiently, the manager needs to have in depth and detailed knowledge of the business positions, market conditions and other external environment constituents. Financial management is a very important aspect in the running and managing of a business and is thus a separate department all together in almost all organizations. This department is mainly headed by the finance manager and his team, the CFO (Chief Financial Officer) and other senior as well as junior staff and members. The financial manager thus is required to have clear-cut knowledge and information about almost everything that is concerned with the firm. He should be aware of the administrative policies as well as the external environment that is the economic environment, social environment, political environment, legal environment and even the cultural environment, as it is in this environment that the business functions and it is their responsibility to satisfy its customers, and behave as well as operate in a manner that is socially acceptable.
Thus, the job of a financial manager is very important and crucial in the functioning of the business. The inception, training as well as appraisal of the finance manager is very crucial and at the same time, it varies from company to company based on the position and size and scale of operations. However, finance being the backbone of any industry, the finance manager must uphold the same position as well.