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Understanding and Functions of Financial Management in Online Business

Life For Techno - Understanding and Functions of Financial Management in Online Business, in general, the definition of financial management is an activity consisting of planning, budgeting, auditing, managing, controlling, earning and storing funds owned by an organization or company. 

Meanwhile, in simple terms, the definition of financial management is a process in the company's financial activities, starting from how to obtain funds and use them.

Which use must be right on target, efficient, and effective so that the company's financial goals can be achieved according to plan.

Understanding and Functions of Financial Management in Online Business

Understanding and Functions of Financial Management in Online Business

Financial management is one of the main sciences of management. Financial management was initially only on the activities of business entities (organizations) within the framework of using and allocating funds of business entities (companies) efficiently.

Then from this, it continues to grow until from what previously only prioritized activities to obtain/acquire funds to include activities to obtain, use funds to manage assets (assets).

Financial Management Function

The following are some of the functions of financial management, namely as follows.

1. Financial Planning, making plans for income and expenses as well as regarding other activities within a certain period.

2. Financial Budgeting, making details of expenses and income

3. Financial Management, the maximum use of company funds in various ways

4. Financial Livelihoods, seeking and exploiting sources of funds used for operational activities of the company.

5. Financial Depository, namely by collecting company funds and storing and securing these funds.

6. Financial Control, namely by evaluating and improving the finances and financial system prevailing in the company.

7. Financial Audit, by conducting an internal audit of the company's existing finances for the absence of irregularities.

8. Financial Reporting, is to provide information about the company's financial condition and of course as evaluation material.

Financial Management Goals

The purpose of financial management is to maximize the value of the company. So that if one day the company is sold, the price can be set at the highest possible price. A manager must suppress the flow of money in order to avoid unwanted actions.

Financial Management Concept

Financial management is the management of financial functions. While the financial function is the main activity in being responsible for certain fields in using funds and placing funds.
Management in the company's business consists of several individuals who are categorized into three groups, namely as follows:

1. Operational management group, which consists of supervisors.

2. The middle management group includes departments, division managers, and branch managers.

3. Executive management or commonly called management in charge of marketing, spending, production, financing, and accounting functions.

Executive management is principally concerned with making long-term decisions, then middle management on medium-term decisions and on operational management on short-term decisions.

Financial management has three main activities, namely as follows..
1. Obtaining funds, namely activities to obtain sources of funds either from internal companies or from external companies.

2. Use of funds, is an activity of using or investing funds in various forms of assets.

3. Management of Assets (Assets), are activities carried out after funds have been obtained and have been invested or allocated into assets (assets), and must be managed effectively and efficiently.
The concept of management can be described in sentences like this "make decisions, give orders, set policies, provide jobs and reward systems (rewards) and hire people to implement policies".

Financial Management Principles

Financial management is not only about accounting records. Financial management is a very important part and cannot be taken lightly.

In practice, financial management is an activity and is present to nourish the finances of a company or organization. Therefore, to make this, let's look at the Principles of Financial Management as follows:

Consistency, is the principle that the company's financial systems and policies are in accordance with what is planned, do not change from each period.

But what needs to be emphasized is that the financial system does not mean that adjustments cannot be made when there are significant changes in the company.

Inconsistent financial approach is a sign that there is manipulation in the company's financial management.

Accountability is a legal and moral obligation, which is attached to every individual, group or company in explaining how the funds or authority that has been given by a 3rd party are used.

Each party must provide an explanation regarding the use of resources and what has been achieved in a form of accountability to those concerned, so that everyone knows how the authority and funds owned are used.

Transparency (Transparency), is the principle that every management activity must be open both in providing information about plans and all activities for interested parties.

Including fair, complete, timely and accurate financial reports that can be easily accessed by interested parties. transparency will result in a misappropriation of activities.

Viability is a principle which emphasizes that the company's financial health is maintained, all operational expenses or at a strategic level must be adapted to existing funds.

The viability of the entity is a measure of the level of security and financial sustainability of the company. shows how a company can execute its strategic plan to meet financial needs.

Integrity (Integrity) is that every individual is required to have a competent level of integrity in carrying out operational activities.

Not only that, the integrity and integrity of financial reports must be maintained with the completeness and accuracy of a financial record.

Stewardship (Management) is a principle that can properly manage the funds that have been obtained and provide guarantees for the funds obtained to realize the stated goals.

In practice it is carried out carefully by making strategic plans, identifying existing financial risks and compiling and create an appropriate financial control system.

Accounting Standards (Accounting Standards) is a financial accounting system that must be in accordance with the principles and standards of accounting rules that have been in effect with the aim of producing financial statements that can be easily understood and understood by all interested parties.

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