Scope of Financial Management as a Career in 2022 | SeekEx

Scope of Financial Management as a Career in 2022 | SeekEx

A career in Financial management seems to be something related to finances, doesn’t it? Yes, it is! If you get intrigued by the management of finances then this can be a great career option for you. As a financial manager, you will be responsible to purchase, allocate and regulate the cash flow of a company. Do you want to know about the scope of financial management as a career? Read this blog to find out.

If you have any sort of confusion regarding your career or you have queries racing inside your head related to financial management then get relevant consultation from experts. SeeKEx app has access to some of the best experts who will provide all the required information regarding the career option and also guide you throughout the process. In this blog, we shall discuss the scope of financial management as a career option. 

What is Financial Management?

The process of managing financial activities is termed as financial management. It includes organizing, controlling, planning, and directing all the finances of an organization. In this process utilization and procurement of the funds are also performed.

In simple words, financial management is the process where the managers make various decisions regarding the size of investments, utilization of resources, allocation of funds, and use of capital in an effective way for maximizing profits. 

To effectively complete the process a wide range of financial management techniques is applied. If you choose financial management as a career then you will be responsible to frame plans and strategies to ensure the optimum allocation of funds. 

3 Types of Financial Management decisions

Financial Management involves different types of decisions. To understand the scope of financial management, it’s essential to understand the types of decisions one needs to make in the process. Broadly the types of financial management decisions can be categorized into three types:

1. Capital Budgeting: 

In an organization, the assets and resources are limited and so it is essential to use them to their full potential. A company must choose wisely where to invest and where not to. Capital budgeting or investment decision is one of the main components of financial management. So, before making any decision regarding investments organizations carefully first go through the available investment options.

For understanding the scope of financial management it’s essential to understand the importance of capital budgeting. 

Among these three financial management decisions, investment decisions are arguably the most important ones. The first thing that one does in the process of capital budgeting is to ascertain the total amount of assets that an organization holds or needs to hold.

That implies the investment decisions of the organization are all about the assets of the company and the process of allocating them for profit maximization. 

2. Financing Decision

The second most important financial management decision is the financing decision. The scope of financial management as a career greatly depends on the fact how well you are in making financing decisions. The financing decisions are the ones that are related to when, where, and how an organization acquires funds. Usually, companies benefit when the value of stock increases, and that is also an indication of the growth of the company.

More investors get interested in investing in such companies. Hence, financing decisions play an important role in framing a company’s capital structure. 

Once the financial manager assesses the required amount and selects the assets that need to be purchased, the focus is on the ways to maintain a proper proportion of debt and equity in the capital structure. Further, for maximizing the wealth of the shareholder financial decisions play an important role.

Only when there is an appropriate balance between risk and return, the desired objectives can be achieved. Companies also consider the issuance of equity as one of the major sources of funds.

3. Dividend Decision

The equity shareholders get a share in the profits of the company and that is termed as dividends. The decision regarding the amount of dividends to disburse depends upon the financial manager. It is one of the crucial decisions as it is associated with the fact whether to disburse the entire profit in form of dividends or keep them to use as funds for certain business activities. 

While considering the scope of financial management it can be said that it is one of the crucial parts of any business. In this type of financial management decision, the impact of dividend distribution or the retention of the wealth of the shareholders is considered while making any decision regarding the disbursement of the dividends.

Importance of Financial Management

Financial management is based on the three pillars that are essential for the growth of any company. To understand the scope of financial management in detail, it’s essential to consider the importance of financial management. Let’s check out the importance one by one:

• Strategizing the financial activities: With the help of financial management techniques, the manager is able to identify the things that are essential for the company and thus strategize the finances accordingly. Proper strategizing enables the company to accomplish its short-term and long-term goals smoothly. The one who takes financial management as a career needs to have insights into the current performance of the company so that they can plan for the future. 
• Best execution plans: Usually, many companies strategize their finances but still fail to allocate the amount in a proper way. That happens due to a lack of proper execution of the plans. Hence, financial managers make sure all the financial plans are executed properly and they are able to maintain the financial reports and all the data on relevant KPIs are updated. 
• Controlling finances of all departments: A single department of an organization can’t be held responsible to operate within the budget. It’s the responsibility of the financial manager to control the finances of all the departments and make the right financial strategy for all the departments. With the help of effective financial management, each department gets an appropriate budget to perform its operations. 
• Growth of the company: One of the importance of financial management is that all employees have an idea of where the company is heading. Proper financial management ensures visibility of growth and that boosts the employee’s motivation. 

Objectives of Financial Management

Each step taken in an organization has its own significance. Similarly, the scope of financial management is quite essential for any company. Financial managers are the ones who help companies not only to manage their finances but in a variety of ways. Before discussing the scope, let’s first discuss financial management objectives in brief:

• Aid in maximizing profits by providing insights regarding the financial expenses. Suppose there is a rise in the cost of the raw materials then that will automatically hike the cost of goods sold. 
• Financial managers maintain the cash flow and also track the liquidity by ensuring the company has enough money ṭo keep up its operations. 
• Another objective of financial management is to develop financial scenarios considering the current state of business and assume the outcomes from possible market conditions. 
• Proper financial management enables the organization to deal with investors and boards of directors effectively. 

Scope of financial management as a career in 2022

All those who are interested in finances or data and management of money, should check out the scope of financial management and consider it as a career. The functional scope of financial management can be understood in a better way by discussing two central approaches to financial management. The first approach is the traditional one that manages funds for businesses.

The second approach is the one that emphasizes the decisions that enable the companies to manage and allocate the finance in optimum manners. Let’s discuss both of these approaches in detail.

Traditional Approach to Financial management

In the traditional approach of financial management, the emphasis was put on the use of financial management to gain financial aid for an organization. Financial management was seen as corporate finance and the purpose was to remain prepared for uncertain situations like liquidation, and reorganization of the company.

The three main aspects of financial management in the traditional approach are to find out institutional sources of finances, issue financial instruments, and build a relationship between financial sources and business finances. 

Modern Approach

The concept of financial management in the traditional approach was to remain prepared for any unpredictable situations. Due to the advancement of technology and increase in competition, there was a need for changes in the approach to financial management. The main aim of the modern approach was to ensure that the resources of a company are allocated in a proper manner.

This includes an analytical perspective to obtain funds and then allocate them to use them in the best possible way. Some of the key elements of this approach are alternatively using the funds, financial planning, capital budgeting, income management, and working capital management.

Career profiles after pursuing Financial Management

Finance is an exciting career field if you are interested in the numbers and statistical data of a company. India is among the fastest-growing countries in the finance sector with exciting and high-paying career opportunities. In earlier days when it was about getting a job in the finance field, it was about getting jobs in government sectors. But with the increase in the scope of business finance the job opportunities in the private sector are also increasing. Let’s take a look at the career profiles related to financial management:

1. Financial Analyst:  

The career profile of a Financial Analyst requires you to examine the financial data of a company and make better decisions. This is a profile where you are responsible to understand the scope of financial management and thoroughly analyze every factor and stage of the economy to find out the ongoing trends in the industry. 

Often financial analysts are placed in consultancy firms where they have to advise the clients who are big corporate houses or individuals with lots of finances. To become a financial analyst you need to have a graduate degree in business administration. 

2. Investment Banking Analyst:

 When it is about the most productive and exciting career profile in financial management then it is investment banking. It is one of the highly demanding career options. Your job role is to bridge between an investor and a securities issuer. Apart from that, they are also responsible to take care of the mergers and acquisitions of the firms. Analyzing the market and making correct investment decisions is a challenging task that the investment Banking Analyst has to perform.  

3. Chartered Accountants: 

Undoubtedly, the career profile of chartered accountants is the most popular one in the finance industry. They are the ones who are known to bring in strategic plans, financial budgeting, and a lot more. Most importantly, they participate in the audit process and act as tax and business consultants.

If you believe in the scope of financial management then you can opt for this career profile. To become a chartered account, you have to clear the exams that are conducted in two phases and different segments. 

4. Financial Service sales representative: 

This is an exciting career profile wherein you have the opportunity to completely explore the scope of financial management. In this job profile, you are responsible for providing financial advice considering the customer’s financial goals. To provide the best financial advice you need to monitor various market trends and then provide advice considering the company’s goals.

Usually, you get placed in banks and credit companies, however, insurance companies and other organizations also look for such services.  

Therefore, if you want to opt for a career in financial management then you should pursue higher-level courses like PGDM in Finance, MBA in Finance, Master of Finance, etc. In these courses, you gain knowledge regarding various financial topics like how to ensure an adequate supply of funds in an organization, techniques to maintain the shares, and how to meet the expectations of the company.  

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How can SeeKEx help in choosing the right career? 

If you have read the blog till now, you are well aware of the scope of financial management and the career opportunities it brings. However, at times students may get confused about the career profiles available in the field of financial management. They may even find it difficult to determine whether this career option is suitable for them or not. In that situation career consultation is the best way out.

Availing career guidance will not only ensure that you understand the career profiles of financial management but it also makes sure that a career in financial management is suitable for you. 

SeekEx app is a platform where the seekers of career guidance can directly consult financial management experts and find out relevant career opportunities in this field. Moreover, with proper guidance, you get all the details about the courses and information about the career options available in this field. Thus, you can make informed decisions about your career choice. 

Conclusion 

Today, there are multiple career opportunities available in different fields. Even in the field of finance, there are numerous career options. Although financial management is one of the popular choices of the students who are interested in the finance field. With the advancement of technology and increase in the businesses, now lots of companies have a demand for financial management professionals.

The main job role of the professionals is to ascertain the scope of financial management for that organization and thus provide financial advice considering the company’s requirements and goals. 

Hence for a successful career in financial management understand the career options that are appropriate for you. With the help of career, consultants check out the courses that can help you to get the best job opportunity in this field. SeekEx has professional career experts who will guide you to understand the scope of financial management as a career in a better way. Avail the guidance on SeekEx and have a successful career!

Frequently Asked Questions

1. What do you mean by financial management?

A. Financial management can be termed as the practice of handling the finances of an organization in such a manner that it accomplishes the financial requirement and goal of the company. 

2. What are the different types of financial management?

A. Basically, there are three types of financial management: Capital budgeting, capital structure, and working capital management.

3. What are high-level courses that I can pursue a career in financial management?

A. For a successful career in financial management, you can pursue courses like MBA in Finance, Master of Finance, and PGDM in Finance. 

4. What are the three main aspects of the traditional approach to financial management?

A. The three main aspects of the traditional approach to financial management are finding out institutional sources of financial, building a relationship between financial sources and finances, and taking care of the issuance of financial instruments.  

5. What is the purpose of financial management?

A. The main purpose of financial management is to regulate the cash flow of an organization.