Financial management serves a vital role in organisational management other than keeping its accounting records. It cannot be recognized as a separate task for the honorary treasurer or finance staff I Ottawa. It involves financial resource planning, organization, control and monitoring to achieve every organisation’s objectives. A sound organisational plan results in effective financial management. Financial planning should be included in the ongoing planning process of an organisation. According to experts, managing your organisational finances has basics as follows:
Components of a Good Financial Management
Good financial management of an organisation involves
- Plan for income generation
- Strong financial management system
- Clear financial strategy
- Appropriate internal environment
Advantages of a Good Financial Management
Organisations with good financial management
- reach objectives set and fulfill their stakeholder commitments
- gain confidence and respect from funding agencies, beneficiaries and partners
- make efficient and effective use of their resources
- have competitive advantage for scares resources
- become more accountable to their donors as well as to the other stakeholders
- prepare for their financial sustainability.
Financial Management Systems
There are some fundamentals in achieving good practice in financial management system, as there is no exact financial management model suitable for all organisations.Identifying some principles is beneficial for the development of this system. This will serve as a guide to the decision making process of an organisation’s managers and trustees.
Basic Financial Management Principles
- Organization of finances leads to the creation of your wealth.
- Organizational expenses should not exceed the amount they earn. This can best achieved by tracking and budgeting the expenses.
- The time value of corporate money should be taken advantage. It is suggested to save often and at early age even at minimal amount to start.
- Debt must be limited to the income-producing assets.
- Entrepreneurs and business leaders require continuous learning in financial management.
- Understanding the return on investments is key in good financing.
- Look for creative approaches for the diversification of an organisation’s income. Turn talents into an opportunity for income generation.
- Maximize employee benefits such as flexible spending accounts, dental and medical insurance and 401(k) plan yield high rates of return.
- Taxes should not be taken lightly as any income generated by an organisation is subject for taxation. Tax information can be managed through financial planning software.
- Organisations need to plan for the unexpected circumstances or unforeseen emergencies.
- Organisations must be transparent on all its work and finances and make information available to stakeholders.
- Individuals involved in the organization should help manage business with propriety and honesty.
- Organisations must observe the acceptable external accounting standards in keeping the financial records and their documentation.
Things to Consider During Financial Planning
- Satisfaction with the budgeting process financial planning
- The objectives set for financial management systems
- Primary financial management principles
- Response of staff to the financial system
- Significance of effective decision making in financial management upon the allocation of resources
Knowledge on the basics of financial management for your own business in Ottawa is imperative for greater success. Also learn about buying or selling your business at the online hub Business for Sale Ottawa.