Financial management accounts is a broad term that covers a multitude of issues in business. Financial management firms, for example, offer different accounts to individuals and businesses for growing capital assets. Businesses use various financial management accounts internally to record and report different operational transactions. Either way, the accounts are very important for any person or business that engages in financial activities. The type of activity and need for a specific account type often drives the demand for these services from a financial management firm.
Basic financial management accounts may be simple checking or savings accounts. This repository — usually from a bank, credit union, or other financial services firm — is open for use by all individuals and businesses. Account users can deposit money and withdraw it or make payments as necessary when conducting business. Other accounts are also available from these financial services firms. Retirement, investment, wire transfer, and other various accounts are all available for use by anyone who needs or desires these services.
Businesses typically use ledgers and journals to mirror the physical transactions that involve financial management accounts. Each ledger or journal holds a specific type of transaction, such as those made for vendor payments or cash collected from customers. These documents and books make up the bulk of a company’s accounting system. Owners and executives can use these items to obtain loans or other financial services based on the past success of the business. In short, the use of current financial management accounts can lead to the use of others.
The use of financial management accounts increases an individual's or company’s assets. Cash is usually the most liquid asset in a company. It is first on the company’s balance sheet under the asset section. Other financial accounts may not appear here depending on the user. Retirement, investment, and other accounts should only go on the balance sheet if they specifically relate to the business.
Different benefits may be associated with different financial management accounts. Checking and savings accounts, for example, typically have lower interest rates. Money markets, short-term securities, and certificate-on-deposit accounts may have slightly higher interest rates due to the restrictions on the use of cash deposited or held. Retirement and investment accounts tend to have the most financial returns for users as their purpose is to make money in terms of passive income. Different financial institutions may offer different interest rates or financial returns based on certain guidelines or regulations.