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ROLE OF FINANCIAL MANAGER IN THE CHANGING SCENARIO The Indian financial system is currently undergoing a period of revolutionary changes

to the extent that by the turn of millennium its face may be totally unrecognizable. In view of the strategy facts of a firm today should not be merely aiming at customers satisfaction by meeting the current and contractual need but it should also be to delight the customer by meeting their intended needs In this changing scenario, the role of a finance manager has also changed. He has to be an active player and vociferous participant and not just a by-stander in the corporate world. The finance professional must now be conversant with both theoretical and analytical issues existing in the market, e.g. funding of investment channels, risk and rewards attached with a variety of financial instrument channels, legal and tax parameters. Globlisation has integrated the national financial market with the global financial market. This has brought new opportunities and challenges for the finance managers which are bound to influence the various financial decisions as explained in the following: Financial decision:- globlisation has made possible for the corporate enterprises to raise funds at competitive rates from foreign markets. Foreign institutional investors and NRIs can be approached to have least cost capital structure. Investment decision:- corporate enterprises now have the opportunity to invest money in both outside the country for the maximaistion of wealth of their shareholders. However, investment made outside the country involves the following risks Political risk:- asset or easn`32ings in a foreign country may be frozen. Regulatory risk: - accounting procedures taxation provisions may be altered in the frozen country. Economic risk: _ long term contracts with foreign suppliers or purchasers may be affected by change in exchange rates.

Dividend decision:- the dividend decision has also to be taken by the finance manager in the overall global scenario, portfolio opportunities in and outside the country and internal financial needs of the business unit. The process of liberalisatiopn and globilisation has led to significant increase in the competition for the Indian industry which otherwise was functioning in a protected and sheltered environment. This has resulted into sickness of many industrial firms who could not keep up with the global competition in providing goods and services of the best quality at the lowest possible price to the consumers. However, globilisation has resulted into the following positive benefits to the Indian industry: 1. There has been boost in trade and commerce. 2. There has been sizeable increase in number of foreign collaborations resulting in transfer of latest technologies to the country. 3. Optimum utilization of financial, material and human resources which has led to improvement in overall efficiency. 4. Larger capital inflows resulting in greater industrialisation besides strengthening the foreign exchange reserves position. 5. Development of infrastructural facilities and new financial instruments.

RELATIONSHIP BETWEEN FINANCIAL MANAGEMENT AND OTHER AREAS OF MANAGEMENT


Financial management is an applied field of administration. Every business activity requires money and hence financial management is closely related with all other areas of management. The relationship between financial management and other areas of management has been explained below: FINANCIAL MANAGEMENT AND COST ACCOUNTING Most of the large companies have a separate cost accounting department to monitor expenditures in their operational areas. The cost information is regularly supplied to the management for control purposes. The finance manager is concerned with proper utilization of funds and therefore he is rightly concerned with operational costs of the firm. The information supplied by the cost accounting

is of utmost importance to him and he makes suitable recommendations to keep costs under control. FINANCIAL MANAGEMENT AND MARKETING Marketing is one of the most important areas on which the success or failure of the firm depends to very great extent. The philosophy and approach to the pricing policy are critical elements in the companys marketing effort, image and sales level. Determination of the appropriate price for the firms products is of importance both to the marketing and finance managers and, therefore, should be a joint decision of both. The marketing manager provides information as to how different prices will affect the demand for the companys products in the market and the firms competitive position while the financial manager can supply information about costs, change in costs at different level of production and the profit margins required to carry on the business. Thus, the financial manager contributes substantially towards formulation of the pricing policies of the firm. FINANCIL MANAGEMENT AND ASSETS MANAGEMENT Assets are resources necessary for conducting the business of the firm. They include both fixed and current assets. The acquisition of assets, their proper maintenance, etc., involve finances. Hence the financial manager is concerned with both acquisition and utilization of the firms assets. He together with other officials of the firm, takes decisions regarding current and future utilization of the firms assets. The competition or mix of assets for achieving the firms goals in the best possible manner is also a matter of joint decision of the financial manager with the other concerned officials of the firm. FINANCIAL MANAGEMENT AND PERSONAL MANAGEMENT The recruitment, training and placement of staff is the responsibility of the personnel department. All this requires finances and therefore the decisions regarding these aspects cannot be taken by the personal department in isolation of the finance department. The attitude of the firm towards other management areas is largely governed by its financial position. A firm facing a critical financial position will devise its recruitment, production and marketing strategies keeping the overall financial

position in view. While a firm having a comfortable financial may give flexibility to the other management functions, such as, personnel, production and marketing. Thus, in the former case, the recruitment, production and marketing policies are adjusted according to the financial policies. FINANCIAL MANAGEMENT AND FINANCIAL ACCOUNTING The information provided by financial accounting is used by the financial manager to take decisions top help the organization in achieving its objectives. Thus, financial accounting is data collecting process dealing with accurate recording and reporting while financial management is a managerial decision-making process. Stated briefly, financial accounting is concerned with the management is concerned with the management of funds.

The main objective of financial accounting is to keep a systematic record of the transactions of the company. Financial management, on the other hand, is primarily concerned with the task of ensuring that the funds are procured at optimum cost and involve minimum financial risk.

FINANCIAL MANAGEMENT: SCIENCE OR ART Financial management is both a Science and Art of course it is neither a pure science like physics nor an art like painting. It is a science because it consists of certain basic principal and procedure based on various theories, capital structure theories, etc; it also takes the help of various statistical techniques. Econometric models, computer technology etc for taking financial decision like budgeting decision, investment decision, capital structure decision etc as a result it will be appropriate to say that financial management is an applied science. It is also an art since the application of human judgment and skills is also necessary for effective management of finances .financial decision cannot wholly be derived on the basis of mathematical of computer based package. A lot of description and judgment has to be used by the finance manager.

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