Short and Long Term Finance Management (Essay Sample)

Short and Long Term Finance Management Name: Institution  Outline For proper business performance, the element of finances has to be greatly considered because it shall guarantee the best performance with any given business. In that case, it is necessary to have measures through which financial management is done in the organization or business. In that case, this paper gives a detailed discussion on finance management in which it does so by looking at both the short term and long term management of finance. The paper also goes ahead to give a detailed description of the major similarities which have to be done with both forms of finance management. The paper comes to a conclusion in which it appraises the importance of financial management practices. Introduction In any given financial matters, the management of finances is something very important for the immediate and event the later future of an individual’s finances or that of an organization. This means that finance management can either be long term or even short term. In that case, the management of finance will basically involve the future planning of someone’s finances or even that of a business. This is usually done so that there can be a guarantee of smooth financial flow for the business or one’s affairs (Stern & Chew, 2003). So as to be done in a much effective manner, it has always been necessary to have administration issues and maintenance of all possible financial goods and assets. Another important element of financial management is that it has to covers all the processes which are involved in the overall identification and management of risks. When it comes to the issues of financial management, there should be the element of assessment on the financial situations rather than involving the techniques which entail quantification of the finances. This gives the duty of a financial manager in ensuring that he or she looks keenly at all the available information and data in making useful judgments on the enterprise or business performance of enterprises (Stern & Chew, 2003). Management of finance should be applied as an interdisciplinary approach which has to effectively borrow from the areas of managerial aspects, accounting modalities, and with corporate financing Short Term Finance Management We mainly have a long term and a short term finance management. However, these two kinds of finance management will all be known to be a science and pure management of money despite the time period the management procedures will be underway. The usage of the term management with finances has been able to evolve slowly by slowly over the past few years and especially with business organizations. In that case, financial forms of management should be quite important since they integrate all the necessary levels within human performance and existence. Human beings together with businesses cannot live without management of their assets and finances as well (Stern & Chew, 2003). When people are talking of short term management, what is being referred to is the short term liabilities and assets. In that case, the short term liabilities have to come from the banks or other trade creditors. Some of the importance towards embarking on the short term finance management is because it is something done in a speedy manner while incurring the lowest percentage of rates. However, the negative aspect will be realized on the fact that there is a higher chance of volatility and downplay with the entire performance (Melicher & Norton, 2007). This short term management has not been greatly embarked on much by some businesses and corporations since they rely much on the long term performances. Short term thus includes the day to day operations in monitoring the small expenditures and incomes which have to be greatly managed. Since these operations are done on daily basis while targeting a shorter period of time, it has been necessary to have it done in a competent manner because it will guarantee the best performance with the company or corporate financial indications (Melicher & Norton, 2007). It should also be necessary for an individual or organization involved in short term financial management to understand the terms of lending, who the money has to be lend to, and the possible payments terms (Melicher & Norton, 2007). This brings down the possible terms that have to be put in place in order to have better performance with the management. All businesses will always be in need of capital. In that case, this capital has to be handled each and every day, hence the great importance of long term business management of funds. Short term management tends to be pretty cheaper hence being able to give positive predictions on the performances of the business. The above provides a portfolio of all the necessary needs of the company on short terms hence promoting performance by a greater margin (Madura, 2008). Borrowing short term capital helps a business perform better during harsh situations thus making it easier to succeed in its business. However, while performing such short term management procedures and operations, there is always the greater need of having long term management if a business organization is to emerge top of the business. Securities are also effectively managed with short term finance management (Stern & Chew, 2003). Long Term Finance Management On the other hand, we have to note that the operations of a business is something that has to be long term and the reason a long term finance management is quite elemental. This has to be done on the backbone of a given foundation which gives a certain time limit which has to be effectively adopted and set as the end goal (Madura, 2008). In that case, when it comes to the business or the corporate standings, one of the major aims or purposes towards having the long terms means in managing of finances is in achieving the major objectives and goals within a given company. Such goals have to be set as target which is bound to be realized within a given point in time. Another greater reason towards having a long time kind of investment and management of financial matters in any given business is in seeking the appropriate means and ways through which future generations of substantial profits and capital in general shall be realized (Madura, 2008). While doing the financial management, it is something necessary that the long term financial managers have to be able to come up with means and ways through which it can be easy or possible to boost all the resources and levels at disposal within the company or corporation. Long term management of finances has the vital ability in controlling all the functions when it comes to the money which has been put in to practice by the external investors or the shareholders (Bennet & Wirth, 2009). In that case, this has hence been able to play a great role in providing all the investors with the necessary or sufficient level of amounts of returns. This has played a diverse role in seeing more and more individuals being attracted into the business. Therefore, since the external investment is one of the best things that any given business can have, the proper management of finances is what guarantees a better performance in the business. Efficient and effective management of financial matters in a business shall hence ensure that all goals and missions of a business shall be achieved with the stipulated time period (Stern & Chew, 2003). Features of Both Forms of Finance Management There are some common features which have been able to fall unanimously on both long term and short term financial management since the most important thing is in the managing of such finances. In that case, these features have to be done in an appropriate manner in ensuring that the final goals have been achieved (Madura, 2008). To begin with, there s...