Financial Managment
Financial Management Practices Good financial management is crucial for the expansion of any business. Successfully placing finances in order means a business can work more efficiently. One of the essential challenges in health care is to manage effectively the finances of the organization. Health care is unique in the way an organization operates based on the finances. This paper will identify effective and ineffective financial management practices that can help to make a company successful. Successfully managing the finances, such as budgeting and cash flow can mean the organization will always have enough money to pay any creditors and also have enough of a profit to operate the business. Effective and Ineffective Financial Management Practices Too often managers have an understanding of their product but not the financial statements of the organization. The manager must have an understanding of what is happening within the organization. The success of the organization can only be ensured by focusing on the factors that affect the performance of the organization. Having and focusing on a plan is essential for the survival of an organization; more so in the health care world because of the many and different areas of revenue. One major area of concern in health care is the third-party payer system. Health care does not have a single billing system for all customers. Managers have to deal with rules and regulations and payment systems from many government and third-party payers (Gapenski, 2008). Short-term financial management is mostly concerned with budgeting for one year. According to Gapenski, 2008 "The primary goal of short-term financial management is to support the operations of the business at the lowest possible cost” (p. 523). Long-term planning is generally strategic planning where an organization sets goals for growth and profitability in sales usually three and five years. Tools for short and long-term planning include cash
References: Gapenski, L. C. (2008). Healthcare finance: an introduction to financial and accounting management (4th ed.). Chicago, IL: Health Administration Press