Business and personal finance management are both important for achieving desired goals. Business and personal finance management considerably differ, in personal finance management a person or a family calculates cash inflows and estimate the expenditures or cash outflows.
On the contrary, corporate or any business organization’s financial management or budget involves balancing risk and profitability. For businesses, financial decisions are initiated on the basis of the company’s capital structure. For different businesses, working capital is often provided by financial organizations.
Personal finance may involve different financial risks, it is the way following which individuals budget, spend and save. Few essential components associated to personal finance are savings account, checking account, credit cards, consumer loans, stock market investments, social security benefits, insurance policies and income tax management. On the other hand, business finance related decisions are associated to fund management or investment.
Expert financial accountants are concerned with business financial decisions and business financial decisions influence future performance of businesses.
Few important steps related to personal finance are as mentioned below:
Assessment: Compilation of financial balance sheets and income statements can provide a clear assessment of personal assets
Setting goals: Financial goal setting is important for direct planning, by accomplishing financial goals it is possible to control unnecessary expenses
Execution: Execution of the individual’s personal financial plan requires discipline and perseverance, and many people obtain help from financial experts such as accountants, financial planners, investment advisors, etc
Monitoring: Investments and savings as per personal financial plans should be monitored periodically
Business financial management is a complex process, some of the major processes used for business financial management are as follows:
Pareto Analysis: Selection of the necessary changes
Paired Comparison Analysis: A close comparison of different business options and identifying the most suitable
Grid analysis: Selection of the feasible option
Force Field Analysis: Analyzing the pressures and constrains related to the changes
Cost/Benefit Analysis: Understanding whether a change is worth making or not
Last Updated on : 1st August 2013