Financial management strategies
Market anomalies can be mysterious or unpredictable.
So to financial managers, I recommend the use of IM CHECKLIST.
What is financial management and example
As a controller of a small business, I managed the line of credit to keep it to the minimum needed to keep the bank balance positive.
In addition, I moved money around between bank accounts.
For example, we kept the payroll account on the imprest basis so that we transferred just enough money from the main bank account to cover the payroll payments.
Then if someone altered a paycheck, the problem would be immediately obvious and the amount would be limited.
,One reason to maintain different bank accounts is that each had different signature requirements and limits on the maximum payment authorized.
And some businesses have accounts in more than one bank so as to maintain relationships with multiple banks.
,And I closely monitored collections of receivables.
Most of our customers paid promptly to take advantage of the cash discount, and others paid within terms (when the receivable become due in 30 days).
But occassionally we had a past due account, so I looked for changes in payment practices of customers.
Often a change of ownership would cause problems.
And I managed the extension of credit to new customers and setting customer credit limits for existing customers.
,As far as the accounting was concerned, I made monthly adjusting entries before compiling the financial statements.
And I ensured that we had proper documentation for any transactions.
,Financial management deals with cash in bank accounts and amounts owed on bank loans.
It also deals with the internal controls of cash receipts and payments.
And financial accounting deals with the recording of transactions and the reporting on financial statements.
The two are interrelated, but they deal with different aspects of recordkeeping.
Role of financial management
Some say that the goals of financial management is to maximize wealth, while others say that it is to optimize wealth.
,What it may be, it is the idea on how you can get the most out of your investments in assets, businesses, ideas, and anything you can make an income.
,The objectives surrounding all financial management strategies are to help you achieve this wealth maximization or optimization.