Most companies, large or small, have key staff members who are strong as it relates to financial analysis and financial management……..WRONG! The fact is that most organizations still equate financial management as the ability to make sure that there is money in the bank, that financial records are up to date, or that there is a proper accounting of all financial resources. What many people don’t understand is that those activities are closely related to financial MAINTENANCE, not financial management; and yes THERE IS A BIG DIFFERENCE.
Financial management is not a cold type of program inclusive of multiple sets of mathematical equations or simplistic administrative processes; financial management is a science, and that science must be respected as companies need to use the finding to:
• Handle the corporate decision making process• Mitigate Risk• Determine growth initiatives• Ascertain the effectiveness of the strategic plans developed by management• Evaluate departments and employees• Maintain shareholder satisfaction• Assist the Board in making decisions affecting the course of the company
While financial maintenance is not only important, but also vitally necessary to the strength and sustainability of the organization; it is a grave error believing that these activities are interchangeable.
In a NEW GLOBAL ECONOMY where companies must place increasing onus on how decisions are made, the element of risk associated with those decisions, and the ability to create contingency plans that allow companies to “hope for the best, but plan for the worst”, financial management must be a major element of everyday operations for all organizations.
The problem is that many companies still use an antiquated approach to financial management that puts them in a risky position in both the short term and the long term. While surveys show that 55% of companies site the need for stronger financial expertise, the fact is that number should be more like 90%. This in no way infers that existing financial experts are incompetent; what it infers is that most companies require more people than they currently have to handle financial management initiatives.