What is Financial Management?

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Posted on 1st November 2011 by admin in Uncategorized

This blog today focuses on health care accounting and finance.  accounting is a system for providing financial information.  It is generally broken down into two principal elements: financial accounting and managerial accounting.  Finance has traditionally been thought of as the area of financial management that supervises the acquisition and disposition of the organization’s resources, especially cash.

The financial accountant of your allied health organization is simply a historian who uses dollar signs.  An integral part of the financial accountant’s job is to report the health organization’s history from time to time to interested individuals (such as the government).  Usually the government requires an organization’s quarterly and annual reports.  When a student studies how to become an accountant, they learn how to prepare all these documents.

The managerial accountant of an organization does a slightly different job; It looks forward while a financial accountant looks backward.  Instead of reporting on what has happened, managerial accountants provides financial information that might be used for making improved decisions regarding the future.  In many health care organizations, the same individual is responsible for providing both financial and managerial accounting information.

Finance in Allied health fields has expanded significantly from the functions of borrowing funds and investing the excess cash resources of the firm.  In it’s broader sense, the finance function involves providing financial analysis to improve decisions that affect the wealth of the organization you work for.  Whereas the managerial accountant provides the information for use in analysis, the finance officer often performs the actual analysis.

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