The financial resources of an organization are the set of liquid assets:
- Short term bank deposits.
- Liquid financial investments, like stocks and bonds.
Financial resources are used to carry out the main operations of the business, like buying goods and services, and to carry out long term investments.
A good financial resources management is key to achieve the goals of the organization. Situations in which the shortage of funds can compromise the short term operations must be avoided. For example, if the organization doesn’t have enough funds to pay salaries or buy raw materials. On the other side, an excess of financial resources can lead to a high opportunity cost.
Budget control and analysis play an important role. Efficient management should react quickly to changes in the environment and pursue a healthy stock of financial resources, according to the needs.
There are several sources of financial resources:
- The main activities of the business, like the sale of goods and services.
- Capital funding: issues of shares and capital contributions
- External sources: bank loans and issues of corporate bonds