Functions of Financial Management Finance functions are carried on to achieve the objective of the firm.

There are mainly two approaches to express the "Financial Function". The first approach relates it to the collection of funds. The second approach relates finance functions to the procurements of funds and their effective utilization. The first ignores the uses of funds it was. It was major finance function at the early stage of the development of finance. The second is comprehensive and universally accepted; we are following the Second One. Finance Functions 1) Executive Finance Functions Investment Decision Financial Decision Dividend Decision Working Capital Decision

2) Routine Finance Function Supervision of Cash Receipts and Disbursements Safeguarding of Cash Balances Custody and Safeguarding of Valuable Documents (Like Securities and Polices) Taking Care of Mechanical details of Financing Record keeping of financial Performance of the Firm Reporting the Top Management Supervision of Fixed Assets and Current Assets

1) Executive Finance Functions Executive finance functions are those functions that require managerial skills in their planning, execution and control. Since these functions require greater managerial ability, they are also known as managerial functions. The executive finance functions are explained here: Investment Decision It refers to acceptance/ rejection of long-term investment proposal. Proposal related to acquisition, modification and replacement of assets are long-term investment proposal. Long-term refers to the time horizon of more than one year. The long term assets like plants, machines, equipments, land, buildings etc Financing Decision It is concerned with the collection of the fund. The financial manager needs to decide about the appropriate amount and sources of the fund. Dividend Decision The net income after paying preference dividend belongs to the equity shareholders. However, there is no legal obligation to pay dividend to the equity shareholders. The dividend decision is the allocation of net profit after tax and preference dividend to equity shareholders. Working Capital Decision Working capital decision refers to the commitment of funds to current such as inventory, bills receivable, cash balance, prepaid, etc. this decision is known as current assets management also..

2) Routine Finance Function It is also the incidental finance function, which is performed to execute the executive finance effectively. Routine finance function does not require specialized skills of finance. They are of clerical nature. So they are called clerical finance function too. These function cover procedures and system and involve a lot of paper work and time, some of them are below:

Supervision for cash receipts and disbursements Safeguarding of cash balances Custody and safeguarding of valuable documents like securities and insurance policies Taking care of mechanical details of financing Record keeping of the financial performance of the firm Reporting to the top management Supervision of fixed assets and current assets.