What distinguishes common sense from professionally constructed management? The former occasionally falters, and the absence of a dedicated finance manager can lead to the absence of management accounting and the emergence of strategic risks. Another significant risk factor is that the longer a company evolves and internal processes develop without a corresponding specialist, the more challenging (and painful) it becomes to restructure these processes in the future and transition to regular financial management.
Any sustainable business hinges on timely financial decision-making. In broad terms, this encompasses everything that determines its health and longterm entrepreneurial success: accurate assessment of business opportunities, efficient resource utilization (not solely financial), timely engagement in specific projects considering prevailing and anticipated economic conditions, partner and employee selection, motivation, and much more.
Upon conceiving an entrepreneurial idea, financial management becomes imperative: one must assess possibilities, calculate required resources for realization, and evaluate associated risks. Even in daily life, financial management permeates all activities. Each of us engages in numerous iterations daily, choosing products at the supermarket, evaluating the option of using a taxi instead of the subway, weighing the risks of purchasing cheaper goods or services, and devising expenditure plans for significant purchases. A closer examination reveals that our routine decisions adhere to basic financial management principles, intuitively embracing budgeting to achieve tactical and strategic life goals. The same applies to businesses: all financial processes demand structure and streamlining.
In financial management, several key components can be identified and, based on them, all financial tasks can be conditionally categorized into four blocks: personnel management, providing management and external users with decision-making information, asset management, and risk management. Why «conditionally»? Because these blocks are interconnected. Personnel management and motivation form the bedrock of all management processes, while risk management entails integrating control points and procedures into nearly all processes influencing financial management. Providing decision-making information essentially serves as the instrument panel for management, empowering the allocation of an organization’s assets.