Managerial finance is not restricted to one department of a company. It is an approach that considers all the discipline and departments of the company. Financial management is important for value creation and organizational efficiency. But the managerial aspect deals not only with techniques used in the company, but it assesses the techniques in global terms and compares with other companies as well and ensures that their implementation leads to maximum benefit to the company.
The various aspects of managerial finance in the light of various departments that work together can be seen with an astute eye and need experts to review the same.
- The manager has to see the relationship between the accounts department and financing decisions. The statements regarding all the financial transactions help to calculate the expenditure, costs and profits and the related tax implications.
- The finance manager needs the historical and projected data to understand every minute details so that the future decisions about the investment can be made more efficiently.
- The managerial finance is also responsible to ensure compliance with all the legal financial matters. The compensation paid to all the employees, the main object of the firm and the values followed by it should align with financial implications.
- One of the most important aspects or department is the production department. The main goal of the firm is to produce goods or services and make a profit. So all the resources should be focused on this aim and ensure their efficient utilization.
- The resources should not only be allocated properly, but this should also help to establish a good reputation. This positive image helps the company to raise finances and more investments in the future and also helps to improve its image in the eyes of its buyer.
- Financial management has to ensure that the employees are paid proper wages, both legally and ethically, as this ensures they work to their full capabilities and improve the productivity of the company.
A company that is managed well financially, and is able to work out the future strategy using the appropriate profit and loss matrices, can improve its profit margins and reputation in the market. In today’s world global challenges make it imperative that the managerial finance function performs in accordance with all the parameters applicable to a global company. All the strategies of a company are based on the techniques used efficiently and this can be ensured using managerial finance.