The fundamentals of financial management are laid in every area of the implementation of business activities by business entities. At the same time, they have quite successfully used special methods of influencing finances when appropriate relationships arise.
They are characterized by such methods of financial management and common techniques as financial planning, programming and forecasting. We must not forget about financial regulation, operational management and the implementation of financial control.
The fundamentals of financial management in terms of planning and forecasting occupy one of the main places in the management system itself. It is during planning by any business entity that the overall state of finances is assessed, the possibility of increasing the size of resources is identified, and the direction of their most efficient use is determined.
The fundamentals of financial management using a tool such as planning are quite effectively displayed when assessing the state of affairs in the near future. In other words, the analysis of prognostic information, the process of obtaining which is called "forecasting". The forecast is some idea of future events that are based on observations, generalizations, and certain limitations.
Financial forecasting serves as the rationale for plans with a prediction of the economic situation for a specific period of time. Based on practice, long-term and medium-term forecasting of the financial activities of the enterprise are distinguished. At the same time, the fundamentals of financial management in the field of forecasting are based on determining the real possible volumes of resources with their needs in the planning period. These forecasts are an essential element in the implementation of financial policy. Among the generally accepted forecasting methods, it is necessary to distinguish the following methods:
- expert evaluations;
- processing of temporal and spatial aggregates;
- situational analysis;
- simulation modeling.
The financial management structure would not be fully considered without such an important element as programming. This is a planning method that uses a program-targeted approach, it is based on goals (clearly formulated) and the means to achieve them.
This financial management mechanism provides for: prioritization of expenditures in the main areas, the desire to increase the efficiency of resource use and suspension of financing when choosing another more acceptable option.
The choice of a particular program option primarily depends on economic and resource factors. It is necessary to take into account, in addition to the scale, value and difficulty of achieving the goal, the amount of available reserves, the predicted overall effect and theoretical losses when the goal is not achieved.
