Financial Control

Financial control is concerned with the organization’s financial resources, and financial resources contain bank loan, mortgage, capital funds, cash flow and payment of debt. Financial control involves managing the organization’s debt so that it does not become excessive. It ensures the firm has enough cash on hand to meet its obligation.

In many ways, financial control is the most important area, because financial resources are related to the control of all the other resources in an organization. For example, too much inventory can leads to a higher storage cost; poor selection of personnel leads to employee termination and result in increase of rehiring expenses; inaccurate sales forecasts is able to disruptions in cash flows and other financial effects.

One of an example I found from book is that the crisis in the U.S. airline industry precipitated by the terrorist attacks on September 11 in 2001. And it result economic downturn which reduced business travel and rising fuel costs can It’s a financial issue that United Airline was facing revenues dropped and its cost increase, because of high labor costs and other expense. In this case, it needs United Airline making appropriate adjustments. Finally, United Airlines spends over half of its revenues on labor for keep its business.

One of an example I found from book is that the crisis in the U.S. airline industry precipitated by the terrorist attacks on September 11 in 2001. And it result economic downturn which reduced business travel and rising fuel costs can It’s a financial issue that United Airline was facing revenues dropped and its cost increase, because of high labor costs and other expense. In this case, it needs United Airline making appropriate adjustments. Finally, United Airlines spends over half of its revenues on labor for keep its business.