FINANCIAL MANAGEMENT

FINANCIAL MANAGEMENT
Meaning

• Finance : Money required to carry out the business activities of company .

• Management : means applying the management principles (planning ,
organizing ,directing ,controlling etc.)
 FINANCIAL MANAGEMENT
Definition

o It refers to the efficient and effective management of money in such

a manner as to accomplish the objective of the organization.
o It mainly concerned with the proper management of funds
 FINANCIAL MANAGEMENT
Definition

o Financial management involves the strategic planning ,

organizing ,directing and controlling of financial resources to achieve
organizational goals effectively and efficiently .it focuses on
maximizing shareholders wealth, ensuring adequate funding and
maintaining financial stability .
 FINANCIAL MANAGEMENT
Definition

1.According to Maheshwary , Financial management is the proper

management of funds .it involves managerial decision regarding the
procurement of long term and short term funds and adequate utilization
of funds .it also deals with framing the dividened policy .
2. It is functional activity of an organization responsible for arising and
effectively using the funds necessary for efficient operations .
 Objectives of Financial Management

1. To implement the fiscal policies

2. To procure appropriate funds for the
organizational activities
3. To ensure an adequate supply of funds
4. To ensure the optimum utilization of funds
5. To provide the fair and maximum output or health
services on capital
 Objectives of Financial Management

6. To appropriate in the value of funds

7. To coordinate with different departments of the
organization
8. To ensure effective financial control
9. To increase the efficiency of the departments by
proper distribution of funds
10. To create goodwill of the organization.
 Elements Financial Management

1. Financial planning :- determining financial goals and creating strategic to

achieve them .
2. Investment decision : allocating funds to various projects and investment .
3. Financing decisions : choosing the optimal mix of debt and equity .
4. Working capital management : managing short term asserts and liabilities to
maintain liquidity .
5. Risk management : identifying ,analysing and mitigating financial risks .
6. Dividend policy : deciding on the distribution of profits to shareholders .
 Functions Financial Management

1. Estimation of capital requirements: depends on its cost, profits, and future

programs and policies. (funds needed for operations and growth .)
2. Determination of the capital structure: based on the short-term and long-
term debt-equity analysis.
3. Allocation of funds : efficiently distributing resources among various
projects.
4. Profit management :ensuring optimal utilization of resources to generate
profits .
 Functions Financial Management

5. Risk management : managing uncertainties that could impact financial

stability .
6. Ensuring financial control :monitoring financial activities to ensure
complicance and efficiency .
7. Management of cash: In financial management, an account officer manages
money for many purposes, such as for payment of wages and salaries, electricity,
water bills, payment to creditors, meeting current liabilities, and maintaining
adequate stock and purchase of raw materials.
 Principles Financial Management

1. Consistency :maintaining uniformity in financial practices .

2. Transparency : ensuring clear and honest communication of financial information.
3. Profitability and growth : balancing short term gains with long term growth .
4. Risk and return : balancing potential risks with expected returns .
5. Liquidity and solvency : ensuring the organization can meet its short term and long
term obligations .
6. Time value of money : recognizing the changing value of money over time .
7. Cost benefit analysis : ensuring costs do not outweigh the benefits of financial
decisions .
 Scope of Financial Management

1. Investment decisions : evaluating and selecting profitable investment

opportunities .
2. Capital structure decisions : determining the best mix of debt and equity
financing .
3. Dividend decisions : deciding the proportion of earnings to be distributed as
dividends .
4. Working capital management : ensuring efficient management of current
asserts and liabilities .
 Scope of Financial Management

6. Financial analysis and planning : evaluating financial performance and

planning future stratrgies .
7. Risk management : addressing market , credit, operational and financial
risks .
8. Corporate governance : ensuring ethical and transparent management of
financial resources .
 Financial planning budgeting for nursing department

o Systematic plan based on nurses' best estimates of nursing in-

come and costs.
o It predicts how revenue will cover expenses and predict return on
equity or profit
o Outlines the goals and objectives of a particular unit (planned
expenditures and income )related to the organization.
o In addition, it provides orientation assistance for optimal use of
human and material resources.
 Purpose
The nursing services budget is used for three purposes
1. To plan nursing services goals, programs and activities
2. To motivates administrators and caregivers
3. As criteria for evaluating nurse performance
 Preparation of nursing care service budget

1. Budget committee: The budget committee will consist of three to four

members based on the expected size of the hospital.
2. Unit information: Plan expenses for each nursing service station and obtain
expense details from the department head.
3. Prepare first draft to send to medical director, financial manager or budget
officer for approval during the fiscal year.
4. The budget committee approves the hospital's final draft.
5. The nursing director will receive an approved draft by January and the budget
will be open to the entire nursing department by the end of March.
6. Funds will be used for equipment, consumables and linens purchased and
inspected during the fiscal year beginning 1 April of each year.
 Basic requirements for creating a budget

When creating a budget, it is important to do the following:

1. Good budget forecasting: Good planning and forecasting of financial needs
is the basis of budgeting.
2. A systematic and well-known accounting system: A balanced accounting
system helps create budget data and compare it with current results.
3. Well-thought-out cost accounting system: Processing requires information
about available costs and possible services within the estimated quantity.
4. An organization with a strong line of authority: A strong line of authority
proclaims stability in terms of organizational responsibilities necessary to
operate a proper accounting system.
 Basic requirements for creating a budget

5. Framing a budget committee: Each faculty dean who is a member of the

finance committee prepares the budget. At the university, each faculty dean
prepares and submits a budget, which is deliberated at the budget committee.
6. Clearly defined business policies: Rules and regulations should be clearly
articulated and the policies applied by each faculty member in each department
of the organization.
7. Statistical information: All statistical details for each budget item should
 Steps to nursing budget
1. Step 1: The first step is to set your organization's productivity goals for the
next fiscal year.
2. Step 2: Consider the projected workload for the next year and the expected
number of days to complete the workload.
3. Step 3: Customer care hours should be systematically budgeted to maintain
efficient staffing levels and ratios based on the patient load of a particular
department.
4. Step 4: Staff schedules should be considered. This includes ensuring patient
care time is included in the budget based on day of week and shift.
 Steps to nursing budget
5. Step 5: When considering your budget, it is important to focus on patient care
time and staffing schedules, but it is also important to plan for nonproductive
time. This includes holidays and sick leave.
6. Step 6: The sixth step in decentralized budgeting consists of graphing and/or
displaying both productive and unproductive time.
7. Step 7: Estimating the cost of the necessary consumables and services that
need to be purchased is another important area to consider based on expectations
for this year and next year.8.
8. Step 8: The final step is to forecast capital expenditures and investments for
the next year. This includes large purchases that should be reviewed before
making a purchase decision.
 Nursing manager's role

1. Administrators need adequate funding to support a solid program.

2. The manager submits a budget request and the basis for the proposed expenses.
3. Budget submitted to the president.
4. Fiscal plans are reviewed, analysed and revised based on discussions with the
president and the budget committee.
5. Once the amendments have been made, the president submits the budget to the
board members for approval.
6. Once the necessary funds have been approved under the budget, the manager is
given authorization to spend and collect income as indicated in the budget
7. Once the budget is approved, the manager has an obligation to support the budget.
8. Once the budget is approved, it is the manager's responsibility to ensure that the
expenditure does not exceed the planned budget.
 Proposal,
projecting requirement for
staff, equipment and supplies for hospital
and patient care units
and
emergency and disaster units
Proposal outline

• It is the projected requirements for staff , equipment and

supplies to meet the operational needs of hospital patient care
unit and emergency /disaster unit .
• The aim is to ensure optimal patient
care ,operational ,efficiency and preparedness for emergencies
.
o As hospital administrator ,nurse also need to know about the
material .
o Medical supply such as irrigation materials , disposable
surgical instruments , maintenance electrical and enginering
supplies , household materials and linens and biomedical
equipment .
 Requirement for hospitals and hospital patient care units

oProper staffing with required budget allocation helps in actual

cost planning and always helps to execute staffing plans even
in case of employee crisis .
oA human resource management plan includes plans to address
all aspects of the workforce and includes the following
information :
1. Identification of human resources
2. Methods of procurement of human resources
3. Criteria for selection of personnel from sources of human
resources.
4. Methods of procurement of resources within organization .
5. Methods of procuring resources from external sources .
6. When will resources be procured (based on project schedule ).
7. When will resources be released (based on project schedule ).
8. Process for maintaining a resource calendar
9. Resource load table representing the total number of resources
required at various points in the project .
10.HR safety guidelines.
11.Identifying training needs and planning to meet team training needs
12.Team compensation and recognizing planning
13.How to build teams and improve team performance
14.How to monitor and support each team member performance keeps
motivated
 Projected requirement
1. Hospital patient care unit
Staffing requirement :
Projection based on patient census :
Nurse to patient ratio of 1:2 in intensive care units (ICUs)
Additional support staff , such as healthcare assistants and
administrative personnel .
 Estimated staffing :
General wards :
Nurse : 20 per 100 beds (8 hour shifts , 3 shifts /day )
Healthcare assistant ants : 10 per 100 beds .
Administrative staff : 5 per 100 beds .
ICU :
Nurses 15 per 10 beds
Health care assistants :5 per 10 beds
Training cost : regular training programs for patient safety and quality care .
o Equipment requirements :
1. Basic patient care : beds , monitors, infusion pumps , oxygen cylinders ,
suctions machines .
2. Specialized equipment for ICUs : ventilators , defibrillators , blood gas
analyzers, delievery table , diathermy device .
3. Maintenance and upgrade of existing equipment . Auto claves, small sterilizers ,clod
chains , ambulances
4. Supply requirements
o Medical supplies : iv fluids , syringes , catheters , dressing , medications.
o Non –medical supplies : linens , cleaning materials , and personal protective Equipments
(PPE)
5. Budget estimate :
1. General supplies :
2. ICU supplies
 Emergency and disaster department
oHospital deals with life threatening emergencies every day , but also
it is important that hospital budgeting takes emergency situtions into
account .
oHospital emergency include :
1. Sudden economic downturn affecting fund arising activities
2. Litigation
3. Massive local disaster stressing hospital resources .
4. Outbreak or epidemic (e. g SARS/covid 19 crisis )
 Types of disaster budgeting

1. Pre –disaster budgeting : This emphasizes the practice of

recognizing the public policy costs of disaster relief and
recovery before disasters occurs .
2. Subsequent budgeting for post –event losses may be
viewed as financial reporting rather than budgeting or more
favourably, amending the budget plan based on new
information .
 Emergency and disaster units
Staffing requirements
On demand staff augmentation :
Emergency medical team (EMT ): doctors , nurse , paramedics
o Support staff for triage and logistics
o Prepardness training :
o Regular disastser response drills
o Specialized training in mass casualty