Edited by Rivermore Academy
Are you confused between accounting, auditing, and financial management? Here, you'll find the clearest explanation of what financial management is all about!
What is Financial Management? Let's put it in plain and simple terms: Financial management is about figuring out how to spend money, how to borrow money, and how to manage daily expenses.
Of course, in the context of a business, financial management becomes more complex as the size of the enterprise grows. However, the essence remains the same: financial management in a business involves managing how to spend money (the company's liquidity and cash flow), how to borrow money (the company's loans and debts), and how to handle daily expenses (the company's accounts and transactions).
For more details, please read another article.
Financial Management, Accounting, and Auditing: What are They?
In the workplace, the roles of finance, accounting, and auditing often leave people scratching their heads. So today, let's clarify the differences between these three.
Finance | Accounting | Auditing |
Responsible for planning and managing the company's financial activities | Responsible for the entire company's accounting work | Responsible for finding discrepancies in corporate accounts, auditing financial statements |
Analyzes corporate financial data to provide decision support | Ensures the accuracy and compliance of financial data | Evaluates the financial condition of the company, makes conclusions and reports |
Manages the company's investments, financing, fundraising, etc. | Processes the company's bills, invoices, and ensures the accuracy of accounts | Assists investors, creditors, and company management in better understanding the true financial situation |
If you're still having trouble visualizing their specific roles, just imagine a company or corporation as a car: Finance is the GPS, providing direction for the car; Accounting is the dashboard, precisely telling you the car's speed, fuel level, and other data; Auditing is the mechanic, checking the car regularly and informing you of any issues.
What Does Financial Management Do?
Now that we have a rough understanding of financial management, do you know what you can do with a diploma in financial management?
Let's not talk about what financial management does yet; first, let's talk about how much money you can make in financial management. According to the 2024 MyCOS Employment Blue Book, once a regular college student graduates in financial management, their monthly income within six months will exceed five thousand; if you already have work experience and further study financial management, your monthly income will increase on top of that base.
Okay, remember this income figure, and then see what financial management can do.
In simple terms, graduates in financial management can become Chief Financial Officers (CFOs), financial managers, or finance directors at the highest level, and they can also work as accountants or auditors at the lowest level.
Of course, we all have to look forward to a better one, just like financial management is about looking at the future, analyzing, and taking a macro view.
If you already have work experience in accounting or auditing and don't want to be stuck in it forever, studying financial management will allow you to climb up with your experience and newly acquired knowledge, becoming a manager or supervisor. If you're outstanding, you can even climb straight to the top as the best Chief Financial Officer!
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