Wednesday, March 6, 2019

The Importance of Financial Management

The Importance of Financial Management

The Importance of Financial Management - The purpose of doing business is making money or profit maximization. However, what if we run the business that never get the benefit? Of course we need to know all too well the financial management problems.

Financial management is one of the areas of functional management in a company, which learned about the use of funds, obtain funds and distribution company operating results.
The main task of financial management include the following: decisions about investments, financing business activities and the distribution of dividends a company.

Problems commonly encountered in finance is the funding, costs (promotion and purchases), sales, profits, receivables, and investments.

In starting a business, various ideas usually emerge. However, the business ideas that sometimes collide with the funding. Because it is the secret of success in financial management is a matter of funding. Some questions that will arise is where we can get the funds? Then how do we get it? How to set the funding? How can the advantages and disadvantages of each?
The secret of success related to financial management is to obtain funding by selecting the appropriate capital sources. One of them with debt, the second is the alias equity capital participation. To choose between equity and debt is by obtaining the appropriate funding source. For example we chose the term bank credit is easy.

If we choose any equity, then choose the source of funds (the Bank) that its requirements are not burdensome. It required both creativity and networking to obtain the appropriate funding source.
Supporting the success of financial management in this way is good preparation. Business proposals and feasibility studies must be prepared with a prime. So that investors and creditors are interested in channeling money to us, and we are confident our business prospects.
Various kinds of funding that we can when the source of equity financing through the Bank are:

1. Personal savings, this is the first place we saw when starting a business. Could be not in cash, but also something that we can be a capital Monetize business as homes and vehicles. We must believe will prospectively whether or not our business.

2. Colleagues, siblings, and relatives who can serve as a source of funds. Place them as business associates. Roles and responsibilities of each must be clear.
3. Individual investors. Person who has the money on the Rp1-billion is actually a lot. Personal as it can be utilized as a source of capital.

4. Companies with excess liquidity. If we have a network with foreign companies is better, because the system of bank interest, which is lower than in Indonesia. Try large-scale business as well, so that others do not hesitate to channel funds to help our financial management.

5. Venture capital firms. For example, Nasional Madani (PNM) and capital management which helps small to medium-sized businesses, and take it off when the major developing companies.

6. Go public or sell shares to the bourse. We can get a larger capital, with risk constraints faced, such as our shares become the property of others.

If we choose the source of funds in the form of debt, meaning able to bear the risk. However, the equities also have the disadvantage that we must be prepared to share both the results and operational. In principle between debt and equity the same, which we must be able to manage and had obtained financial management.