Like every business you know, financial management deals with money inflow, outflow, and all related decisions. In the same way, golf as a business has its financial implications that require an in-depth knowledge of not just the game but, more importantly, its business dimension. This article will discuss the economic importance of starting and running a pro golf shop. Hopefully, it will guide business owners in the path of more profitable financial decisions.
Financial management is responsible for planning or organizing, and governing all economic activities of a company or brand. It simply applies ethical management skills to coordinate the company’s financial resources towards a more financially secure future and growth. More so, financial practices control the economic operations of the business by procurement and appropriation of funds, as well as payment, accounting, risk assessment, and similar processes.
What are the Major Roles of Financial Management in Business?
Provision of Reports
The financial management of a company has the responsibility to prepare regular reports on the business’s financial status. For instance, the stakeholder expects a financial statement every month or/and at the end of every fiscal year. The financial department also shares reports with the stakeholders for vetting, critical analyses, and future decisions. For instance, the financial statement shows the stakeholders when and where to buy or sell stocks. Based on the importance of this report, the economic data must be accurate always.
Bookkeeping and Accounting
Keeping financial records and accountability is perhaps the most critical role of the financial department of the golf company. Therefore, it is essential to quickly identify financial matters and take the appropriate steps. However, before bringing these steps, there is a need to track all the necessary financial details of the company. For instance, the company needs to know the flow of funds in terms of debit and credit. This process may be automated but must be subject to regular audit to ensure checks and balances. Meanwhile, the bookkeeping records show the day-to-day affairs of the business transaction for the accounting procedures.
Receivables and Payables
There must be an accurate view of what the company is owning other companies (vendors) or individuals (customers) in financial management. This management aspect ensures the company can evaluate the liquid cash at hand and not overestimate or underestimate its worth at any point. In addition, an element of monitoring the receivables and payables zeroes in on the business’s inventory management with a projection on the company’s future.
It is fantastic to know that there is no better way to boost your business profit than re-investing in other businesses and stocks. Therefore, financial management work must provide for investment opportunities for would-be investors. Meanwhile, a suitable investment must also be made at the right time. Still, it is impossible to make an accurate judgment, except there is an accurate report on the financial status and capacity of the company.
As important as financial records, bookkeeping, and accounting systems are, there is also a crucial need to consistently measure the involved risks. A robust financial management system must cater to maximizing the profits of a business while limiting the risks and liabilities to the barest minimum. One way to ensure success in risk management is to secure insurance coverage for all the essential elements of the company’s stature and value. When an insurance plan is in place, it is easy to focus more energy on other aspects of the pro golf shop.
The Application of Financial Risk Management
Given the importance of risk management in finance and the volatility of some markets, there is a need to have a full grasp of business finance. However, this process is nearly impossible without predefining the financial objectives of this business brand, in this case, a golf company. Therefore, the following items can guide the involved processes before taking a financial risk. Six types of risks are involved in business and must be arranged in order of priority.
Market risks refer to those risks that arise from some uncertainties with the financial market. It is majorly market-based risks that a financial decision-maker needs to know and project accurately before taking a financial risk.
Credit risk occurs from the inability to recover the credit that was lent out to another entity. When a given credit lingers with the borrower over an extended time, it brings about a level of disadvantage to the giver. This type of risk is called credit risk.
Liquidity risk arises from a company’s inability to reach its own financial funding needs. It factors in the amount of liquid cash that a company can provide to meet its pressing needs at a particular point in time.
Operational risk can be easy and costly at the same time. It refers to the dangers of errors or mistakes by personnel in the company about a financial decision. If the risk was risky decision was deliberate, then it may be tantamount to fraud or demeanor. Otherwise, it may simply be an error in the systemic operations of the business.
Interest Rate Risks
An interest rate risk arises from a drastic change that occurs in the interest rate of a loan due to deflation or inflation. This change may lead to financial stress and affect a company’s financial status and ability.
Foreign Exchange Risks
A foreign exchange risk can occur when some uncertain movements in the foreign market affect the financial operations of another company due to a relationship. Such risks may be beyond the control of the affected companies. The company, therefore, needs to look for alternative methods of coping and managing the risks.
In conclusion, the financial management in golf as a business is the same as is expected in any company. This aspect of the business is also so important that it requires competent and professional hands to make good decisions. More so, irrespective of the company’s size, there is a need for a financial expert. However, suppose the company cannot employ a financial expert full time. In that case, it can operate on a part-time or contract basis. What is essential is that the company must have a solid economic base and build stature through economic growth.