Financial management defined – Financial management refers to activities that are concerned with securing money and uing it properly. The entrepreneur as financial manager must determine the best ways to raise money. Financing the enterprise – many poor filipinos with they have seed capital in order to put their own micro business. In rural areas, some folks like to put up backyard poultry or piggery projects for additional incomes. And yet such market vendors or street hawkers have no formal business training, and they obtain their capital from the bombays and other sources with high interest rates. Cooperatives for micro business – A credit cooperative usually charges one percent interest plus a nominal service charge. Successful cooperatives have been responsible for the economic and social upliftment of poor people in all countries. Other sources of funds – There are government and non-government organizations that extend both financial and technical assistance to small entrepreneurs. We have the PNB , DBP and LBP . They gave their own programs for small and medium-scale enterprises. Some sources of funds : Short-term financing (one year or less) Trade and credit – goods are delivered to retailers on consignment basis. Promissory notes – this is a written pledge by a borrower to pay a certain sum of money to a lender at a specified future date. Unsecured bank loans – Commercial banks grants unsecured short term loans to their customers at interest rates that vary in accordance with their credit ratings. Commercial paper – This is a short-term promissory note issued by big corporations. Commercial paper is secured only by the reputation of the issuing corporation. Long term financing (more than one year) A . Loans – Long ranged activities from loans borrowed from banks and other financial instituitions. B. Stock – This is a certificate of ownership . A stock is classified as a common and preferred . C. Bond – Certificate of indebtedness. It pledges to repay a specified amount of money with interest . Such certificates indicates maturity dates. Developing the financial Plan . A financial plan is a course of action for obtaining and using the money that is needed to implement the goals of the business organization. Three steps involved in financial planning : 1 . Establishing objectives –These should be clear and specific to determine cost or budget . Objectives should be realistic. That is , they can be supported by available resources in terms of human material and financial inputs. 2. Budgeting – A budget is an estimated or projected program of expenses and incomes over a specified futured period. 3. Identifying sources of funds – There are four primary types of financing a business enterprise : A) income from sales, B ) Owner`s money and sale of shares of stock, C) borrowings from friends, of some property of the enterprise as a last resort. Evaluating Financial Performance – Plans are simply written statements, There are usuless if they are not implemented. In the government , there are numerous plans and programs which are very good.
Posted on: Tue, 08 Oct 2013 07:57:06 +0000
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