Scope of Financial Management

A sound financial management is essential for all types of organisations – whether it is profit or non profit, government or private organisation. Most of the time we observe that the firms have liquidated.

This is not because their technology was outdated or obsolete, but because of mismanagement of financial affairs. The main task of financial management is to optimise the output from the given input of funds.

Financial management is very important for non profit organizations because they do not pay adequate attention towards financial management. Financial management is an integral part of overall management. It is not only confined to fund raising operations but also utilities these funds and monitors its uses. It also influences the operations of other functional areas such as production, marketing and human resources.

Therefore it is advisable to take decision regarding financial matters with due consideration. Financial managers must take all the financial decisions within the framework of corporate objectives and policies. The financial management affects the survival of the firm because its survival depends on the strategic decision made on matters like product development, market development, expansion of the plant, change in location, etc.