Transparency In Financial Management

1798 Words 8 Pages
Management is defined as the process of dealing with or controlling things. When a company manages its finances it controls how and how much to spend. A company in any stage of maturity may decide there is an opportunity to expand that requires more funds than it has on hand. In order to proceed the company will look at financing options. Company financing is a delicate orchestration of balance that aims to maximize growth without being dangerously risky. The goal is to have a thriving business and if the company decides to finance it must choose a source. This paper discusses options for financing and the management thereof. One way a business can acquire funding is through debt financing, or money provided by an external lender. Typically, …show more content…
Transparency is defined by a business dictionary as the “lack of hidden agendas or conditions, accompanied by the availability of full information required for collaboration, cooperation, and collective decision making.” This honesty in company operations is valuable to investors and can directly drive value into the company. When an investor looks at companies’ financial statements to access risk they will look more favorably on the company that practices transparency because they know the company is providing an honest and complete view of its financial position. Lack of transparency that makes debt levels unclear and financial statements complex can cause investors to make ill informed decisions. Imagine buying a used car that the salesman said is working well, has all genuine parts, and is a great deal. Only to find that is was working well last week, all the genuine parts are from a junkyard, and the great deal is an opinion at best. Transparency is timely and …show more content…
The XBRL organization defines a fact as an individual piece of information in a report, an instance document as a collection of facts that together make up a business report, a concept as a definition that provides meaning for a fact, and a taxonomy as a collection of concept definitions. Because transparency is important to manage debt properly, XBRL is as well. Using an accounting information system in an XBRL format can greatly improve manageability of a company. With the capability to send and receive XBRL tagged data between software platforms a company will be able to analyze its’ own finances, file its’ required reports, and provide details investors may need, without any additional work. Managing finances and controlling debt is a pivotal part of running a successful business. Every companies needs are different, but there are many routes to take for financing. To choose a method of financing a company will aim for the most beneficial method. When seeking to achieve the best possible business plan, it is important to strive for transparency. XBRL helps gain transparency and control in company finances. Chronologically speaking, a company should manage itself with an accounting information system in an XBRL format and keep transparency in mind. When the company discovers a growth opportunity it will be ready to show creditors and investors the value of the company and growth

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