Hello, Financial management is one of the important parts of overall management, which is directly related to various functional departments like personnel, marketing, and production. Financial management covers a wide area with multidimensional approaches. The following are the important scope of financial management.
Table of Contents
What is the Six Scope of Financial Management
1. Financial Management and Human Resource
Financial management is also related to the human resource department, which provides power to all the functional areas of the management. The financial managers should carefully evaluate the requirement of manpower to each department and allocate the finance to the human resource department as wages, salary, remuneration, commission, bonus, pension, and other monetary benefits to the human resource department. Hence, financial management is directly related to human resource management.
2. Financial Management and Marketing
Produced goods are sold in the market with innovative and modern approaches. For this, the marketing department needs finance to meet its requirements. Introduction to Financial Management 5 The financial manager or finance department is responsible for allocating adequate finance to the marketing department. Therefore, marketing and financial management are interrelated and interdependent.
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3. Financial Management and Production Management
Production management is the operational part of the business’s concern, helping many of the money to profit. The benefit of concern depends on production performance. Production performance requires finance. Because the production department needs raw materials, machinery, wages, operating expenses, etc.
These expenditures are decided by the financial department, and estimates are made. And finance managers allocate appropriate finance to the production department. The financial manager must be aware of the operational process and finances required for each process of production activities.
4. Financial Management or Mathematics
Modern approaches to financial management applied a large number of mathematical and statistical tools and techniques. They are also called econometrics. Economic order quantity, discount factor, time value of money, the present value of money, cost of capital, capital structure theories, dividend theories, ratio analysis, and working capital analysis are used as mathematical and statistical tools and techniques in the field of financial management.
5. Financial Management and Accounting
Accounting records include the financial information of the business concern. Hence, we can easily understand the relationship between financial management and accounting. In the olden periods, both financial management and accounting are treated as the same discipline.
Then it has been merged as Management Accounting because this part is very much helpful to finance managers to take decisions. But nowaday’s financial management and accounting discipline are separate and interrelated.
6. Financial Management and Economics
Economic concepts like micro and macroeconomics are directly applied to financial management approaches. Investment decisions, micro, and macro-environmental factors are closely associated with the functions of a financial manager.
Financial management also uses economic equations like money value discount factor, economic order quantity, etc. Financial economics is one of the emerging areas, which provides immense opportunities to finance, and economical areas.
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Business management expert and Leadership Consultant and Business Coach, who writes her blog, Jay’s Trends, focused on helping small business owners understand trends in Business management. Other posts by Jayprakash Prajapati»