What is financial management?

Financial management (definition)

Financial management is strategically planning how a business should earn and spend money. This includes decisions about raising capital, borrowing money and budgeting. Financial management also involves setting financial goals and analysing data.

Financial management starts with recording all the money your business earns and spends. Accountants then prepare reports that help owners understand the financial health of their business. These include profit and loss statements, balance sheets, cash flow statements and budgets.

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Disclaimer: This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.