Financial management is defined as planning, organizing, directing, and controlling financial-related activities in an organization. (Brigham and Ehrhardt, 2020)
Financial management is important because of the following reasons; it provides the organization with financial stability by ensuring that the organization has enough funds to meets its financial obligation, it helps the organization to plan in term of finance, it also helps the organization to solicit for funds as well as effectively utilize the funds received, it helps to improve the profitability and the value of the firm (Brigham and Ehrhardt, 2020).
Differences between Financial Management and Accounting
The objective of accounting providing financial information while the objective of financial management is to maximize returns and shareholders’ wealth (Edmonds, 2017). The financial information reported by accounting is for internal and external use, whereas the financial management information is for internal use by management for decision making and planning (Edmonds, 2017). Accounting is categorized as financial management and cost accounting, whereas financial management deals with planning and budgeting, reporting financial activities, keeping account records, and financial controls (Edmonds, 2017). Accounting reports financial activities of the past while financial management involves futures planning by using financial statements, accounting shows the organization financial position while financial management picture of activities of the business (Morgan, 2019). In accounting, the funds are measured using accrual basis, whereas in financial management fund is measured using cash flow (Morgan, 2019).
Financial management in industrial engineering
Industrial engineering deals with optimizing complex processes and systems by creating, improving, and implementing integrated systems (Buxton, 2013). Financial management fits into the field of industrial engineering because engineering involves manufacturing, research, and production management, which requires statistical analysis provided by accounting (Morgan, 2019). Financial engineering applies a combination of mathematics and science to solve very technical problems. Accounting knowledge helps engineering solve such issues by analyzing and presenting the analyzed data into simple, understandable data (Brigham and Ehrhardt, 2020).
REFERENCES
Brigham, E.F., and Ehrhardt, M.C. (2020). Financial management : theory & practice. Boston, Ma: Cengage.
Buxton, C. (2013). Principles of industrial engineering. The classics Us.
Edmonds, T.P. (2017). Fundamental managerial accounting concepts. New York: Mcgraw-Hill Education.
Morgan, D. (2019). The accounting principles : the what, the why, and the how. David Morgan.