According to Professor John D. Finnerty of Fordham University, Financial management in engineering is a creative means of solving engineering problems. As in every vocation, financial management is a very important tool since it is a well-known fact that greater efficiency can be achieved by reducing production and transaction costs.
Each firm in Nigeria should review the level of their financial innovation and if it has none, it should be put in place. Competition demands that engineers should develop new products, develop better processes, and implement new solution.
How to Define Financial Management in Engineering
For the engineer, financial management has to do with the planning, directing, monitoring,organizing, and controlling of the monetary resources of an organization. This is a crucial step in ensuring that a firm maintains longevity and good corporate governance. In this case, financial managers or officers plan, direct, and coordinate accounting, investing, banking, insurance,securities, and other financial activities of a branch, office, or department of an establishment.
Wikipedia asserts that “financial engineering is a multidisciplinary field of creating new financial instruments and strategies. The field employs financial theory, the methods of financing,mathematics, computation, and the practice of programming to achieve the desired end results.”In this article, we will concentrate on the former: Financial manage and how it affects the consulting engineer, what cutting-edge tools and resources are required to build organizational success.We can basically look at aspects that wraps around financial management in engineering.
Firms in Nigeria and worldwide seek to produce better goods for consumers and at the same time.Just like any other business person would, the engineer must look for ways to lessen the financial constraints he faces, seeing that even in the issues that have to do with funding, the Nigerian consulting engineer is more at a disadvantaged position than his foreign counterparts.
The consulting engineer is not an accountant. One of the most common concerns he has as a leader in sector is the understanding and managing the financial health of their practice. Yet, he must evaluate financial performance through interpretation of income statements, balance sheets, cash flow statements. Having a full appraisal of these is critical to their personal success as well as the success of the business. However, managers whether engineers or not have limited access to training programs that provide the skills to be effective financial managers.
Such training teach the engineer how to read and interpret the income statement, including gross revenue, net revenue, direct and reimbursable expenses, indirect expenses, net profit before taxes, depreciation, gross profit and net profit after taxes, etc. In addition, the training can help the engineer to examine the balance sheet components of assets (current, fixed and other), liabilities (current and long-term loans),and stakeholder equity.