For financial decision-making, first of all we must know the guidelines that will allow us to frequently make and evaluate the decisions that companies make on a daily basis.
Above all the areas that comprise it, based on the fact that these decisions depend on the success or failure of the same organization or the department where the decision is being discussed. Knowing that the current situation of the country is in uncertainty in the company's projections that are unpredictable due to the economic, political, and social factors that are affecting the countries' economies worldwide.
Decision making is not a subject that can be exercised with less knowledge, so it is very important that every manager or person who performs similar positions needs to carry out an analysis of the external and internal variables before making a decision. It can affect the normal development of the activities of a company or business.
It is also important to ask ourselves questions such as: When is one alternative better than another? When does it cost less effort? When does it produce greater satisfaction? When is it more possible to achieve? In order to be able to go towards our real objectives. Something very important and elementary that we should know when starting the process of making our financial decisions is what type of decision we are going to make, that is, if it is an investment or financing type, or if it is a dividend distribution For example, when at the end of the year, when handing over the company's balance sheet, depending on how much profit the company has had, decide what percentage of it will be destined to the partners, or if the idea of reinvesting in improvements for the company is viable. company that capital.
In truth this involves all the activities of the company. Even authors like Harrington and Brent reduce them to just two, when they state:
“Financial decisions can be grouped into two broad categories: investment decisions and financing decisions. The first group has to do with decisions about what financial resources will be needed, while the second category is related to how to provide the required financial resources. ”
More specifically, financial decisions in companies must be made on: investments in plant and equipment; investments in the money market or in the capital market; investment in working capital; search for financing by own capital or by foreign capital (debt); search for financing in the money market or in the capital market. Each of them involve even more specific aspects, such as: decisions on the level of cash on hand or on the level of inventories. It is necessary to study the different interrelations between these two great types of financial decisions.
The way in which individuals make decisions in organizations and the quality of options they choose are mainly influenced by their perceptions, their beliefs and their values.
Decision processes in organizations are very important because they generally affect all human processes within them. Communication, motivation, leadership, conflict management, and more.
In the decisions that are made within organizations, the evaluation of each of the alternatives must be rigorous and the cost / benefit of each one must be analyzed, to choose the one that offers the best reason. Most organizations formulate their goals, strategies, policies, procedures, and standards that guide decision-making and shape their action plan, providing business direction, while ensuring formal coordination of resources. One of the great disadvantages of financial decision-making is in the Financial Statements, or more commonly called Income Statements.
It is known that the financial statements of a company must be a tool that contributes to decision-making in companies and this is the case, if the company does not do it or, to be more precise, the executives would be making a serious mistake, I will explain why.
In addition, it is true that all the departments of an organization need and provide data and that one of the accountant's functions is to collect, transform and return them as information and that this information will be very useful for the departments to evaluate their performance against what they had an estimate and from there make decisions to correct or improve.
It is also common to think, although I consider it an error, that at the end of the function of the accountant, that is, to produce financial statements, these are delivered to the Manager or President of the company and then he will recognize the situation of the company and will begin to make decisions one way or the other. I do not think this is so, that Manager or President who waits for the accounting to provide him with information regarding how his business is lost, will be receiving it very late, when everything has happened. That is why many managers do not use financial information, because when they receive it they no longer need it, it is something they already know. They know it simply and simply because they are there every day, working, selling, buying, motivating people, asking in every department that passes,Problems and questions come to him and he gives the answers, so that the financial situation not only knows him but he feels it.
It is for reasons such as this that organizations, when making these types of decisions, have the most up-to-date information possible, so that the decision they are going to make is highly accurate, since the decision made will be of great importance in the future of the company. I believe to conclude that financial decisions are perhaps the most important decisions that can be made in organizations, since these not only depend on the company as such, but the employees who work there, since a bad decision can even come to cause the closure of the company, bringing as a final result, unemployment.
