Financial Management for Merchandise and Equipment- myassignmenthelp

Question: Discuss about theFinancial Management for Merchandise and Equipment. Answer: Introduction Financial management in a nonprofit organization is significant to effectively run the business operation. It is identified that the main goal of profit organization is to earn a profit and increase the value of their shareholders. But, the main purpose of the non-profit organization is to facilitate the socially desirable requirement on an enduring basis. In current business practices, profit organization depends on exchange transaction between businesses and B2C. However, the non-profit organization depends on the money that is donated with a specific intention (Hudson, 2017).This essay discusses the financial management difference between nonprofit and profit organization. It also presents the role of Financial Management in not- for profit organizations. Role of Financial Management in Not- For Profit Organizations According to the Finkler et al. (2016), financial management is essential for both profit and non-profit organization. A non-profit organization must demonstrate the activities regarding donating resources. The workforces of the organization could be able to demonstrate their expenses activities by assessing the financial records. Furthermore, two essential areas of financial management play important role for not-for-profit organization named budgeting and cash management. Therefore, these companies focus on the utilization of reserved cash. It can be stated that estimation of cash flow is challenging for the organization because the organization heavily depends on the resource providers. In support to this, Renz (2016) evaluated that management and protection of financial resources are essential for the not-for-profit organization because, without adequate resources, the company may not attain its mission and survive in the industry. Financial resources comprise goods and services, and money. Money includes the checking, securities, investment, cash and savings that organization has required to run its business operation. Goods contain the supplies, merchandise, and equipment. Services are the program and activities which are delivered to the customers. These resources could be managed by financial management because it will decline the risks related to business. Furthermore, it will enhance the value and gain the financial resources. Bryce (2017) discussed that financial management plays important to manage the asset in the nonprofit organization. Therefore, it is essential for an organization that it should have adequate assets to fund their existing operations. They have to be competent to make stability between available and growing resources. Moreover, not for profit organization should be able to pay debts in a well-timed manner, and should accomplish other financial obligation. After creating the budget, a company can pay attention on financing the existing operation and gain resources to increase their return on capital and assets. Assets management is also required to maximize the resources. It also manages the cash inflows and outflows which help the not for profit organization to provide more benefits to communities. Consequently, it will gain significance of budgeting because the nonprofit organization would be able to attain the financial obligation. McKinney (2015) argued that nonprofit organization is distinguished from profit organization in a different manner. In this way, it stated that the main aim of profit organization is to increase the profits and transfer this profit to the director of the company and shareholders while the key purpose of the nonprofit organization is to fulfill the needs of societies. Together with, the nonprofit organization has no director and employees act with the purpose of increasing the revenue and minimizing the costs because it will ensure that company is providing benefits to societies. In favor to this, Maier et al. (2016) stated that profit organization pays tax on their earnings however nonprofit organization does not pay taxes due to not getting profit. Government helps the non-profit organization to minimize their costs because the key intention of this organization is to act with respect to the welfare of the society. Moreover, there are two kinds of organization that affected each kind of accounting practices. In case, tax exempted nonprofit organization submits their financial statement to IRS then it will only assess the sales tax and real estate tax. Arvidson and Lyon (2014) argued that financial management plays important role in appropriate managing the funds. Hence, the non-profit organization has to pay attention to the mission of the company. Further, it should monitor the progress of the company and also focuses on how capitals are being used. There are different restriction and limits that must be followed by the company during managing the funds. Since, the inappropriate use of funds can cause an extraction of money, having to reimburse the money and not getting a future return. Another cause is a loss of exempted tax and other legal problems. In support to this, Chikoto and Neely (2014) opined that a budget is an operating plan for the company. Hence, the decision regarding accomplishing the mission of the company is made by staff and board members. They have to choose the agenda that will create positive effects and then assign the resources as per the plan. The budget facilitates the steps to staffs to achieve their objectives. The budget also enables the nonprofit organization to assess how funds will be assigned and how to make optimum utilization of resources. It also helps to address the potential financial issues of the business in future. Conclusion From the above discussion, it can be concluded that financial management is beneficial for a non-profit organization to manage the finances on daily basis. Further, it enables the company to assess where donated resources are invested. It can be also summarized that there are two essential areas of financial management that are to be focused on the nonprofit organization named cash management and budgeting. Along with this, it can be evaluated that fund and asset management is significant for the nonprofit organization because it enables the company to distinguish the donated money by time and intention. Not for profit organization should do a self-assessment to evaluate the companys position because it will help to make continuous growth. References Arvidson, M., Lyon, F. (2014). Social impact measurement and nonprofit organizations: compliance, resistance, and promotion.VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations,25(4), 869-886. Bryce, H. J. (2017).Financial and strategic management for nonprofit organizations. UK: Walter de Gruyter GmbH Co KG. Chikoto, G. L., Neely, D. G. (2014). Building non-profit financial capacity: The impact of revenue concentration and overhead costs.Nonprofit and Voluntary Sector Quarterly,43(3), 570-588. Finkler, S. A., Smith, D. L., Calabrese, T. D., Purtell, R. M. (2016).Financial management for public, health, and not-for-profit organizations. Australia: CQ Press. Hudson, M. (2017).Managing without profit. USA: Directory of social change. Maier, F., Meyer, M., Steinbereithner, M. (2016). Nonprofit organizations becoming business-like: A systematic review.Nonprofit and Voluntary Sector Quarterly,45(1), 64-86. McKinney, J. B. (2015).Effective financial management in public and nonprofit agencies. UK: ABC-CLIO. Renz, D. O. (2016).The Jossey-Bass handbook of nonprofit leadership and management. USA: John Wiley Sons.