• The three areas of business finance
  • Who handles it

Corporate financial management is how a business decides where its money comes from and how it's used: managing day-to-day cash and short-term bills, choosing which long-term assets to buy, and deciding how to fund the business. The open textbook OpenStax Principles of Finance describes business finance as the area that "looks at how managers can apply financial principles to maximize the value of a firm in a risky environment."

Billed publishes this page. The definitions below are quoted from OpenStax Principles of Finance, opened on October 30, 2026.

The three areas of business finance

OpenStax says that "In business finance, managers focus on three broad areas":

  • Working capital management: "the study and management of short-term assets and liabilities", such as cash, what customers owe you and what you owe suppliers.
  • Capital budgeting: "the process of determining which long-term or fixed assets to acquire in an effort to maximize shareholder value", such as equipment or a building.
  • Capital structure: in the textbook's key terms, "the mix of financing, usually debt and equity, used by a firm".

At its simplest, OpenStax puts it this way: "At its essence, the study of finance is about understanding the uses and sources of cash, as well as the concept of risk-reward trade-off."

For the long-term side, see what is capital expenditure. For the short-term side, see what is working capital.

Who handles it

In a larger company these jobs are split across roles. OpenStax's section 1.2, The Role of Finance in an Organization, describes them:

  • Controller: "Controllers are in charge of financial reporting and the oversight of the accounting activities necessary to develop those reports."
  • Treasurer: "the treasurer is also responsible for monitoring cash flow at a firm and frequently is the contact person for bankers, underwriters, and other outside sources of financing."
  • Chief financial officer: "The CFO sets policy for working capital management, determines optimal capital structure for the firm, and makes the final decision in matters of capital budgeting."

In a small business, the owner or a part-time bookkeeper and accountant may cover all three.

Planning, budgeting and forecasting

OpenStax says financial planning "allows a firm to understand the past, present, and future funding needs and distributions required to satisfy all interested parties." It describes budgeting as "planning for the amount, sources, and uses of cash", and adds: "Budgeting can help identify the differences or variance from expectations, and forecasting becomes the process for adapting to those changes."

It also notes: "Cash flow statements estimate the timing and magnitude of actual cash flows available to meet financial obligations." See what is a cash flow statement and how to create a business budget.

Sample: a three-month cash budget

The business and figures here are a sample, invented for this example.

A small design studio starts January with $12,000 in the bank and wants to keep at least $10,000 on hand. It budgets the cash it expects to receive and pay each month:

  • January: $12,000 + $30,000 received − $34,000 paid = $8,000 at month end.
  • February: $8,000 + $28,000 received − $26,500 paid = $9,500 at month end.
  • March: $9,500 + $35,000 received − $31,000 paid = $13,500 at month end.

The budget shows cash below the $10,000 minimum at the end of January ($2,000 short) and February ($500 short), and back above it by the end of March. That's the point to look at timing: when clients pay, when bills are due, and whether to hold off a purchase. If actual figures differ, the difference between budget and actual is what the forecast adjusts for.

Where Billed fits

Billed's financial reporting page says: "See your partially paid, past due and paid invoices in a glance with Invoice reports." It also says: "See how profitable your business is with Income vs Expense report." Billed's expense tracking page says an expense in Billed records "who you paid, when, how much and which category it belongs to, with the receipt attached to the same entry", and that reports "can be filtered by date range and exported for your accountant, bookkeeper or tax software." See also expense tracking for small business.

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Frequently Asked Questions

What is corporate financial management?

It's how a business plans, raises and uses its money. OpenStax's Principles of Finance describes business finance as looking at "how managers can apply financial principles to maximize the value of a firm in a risky environment."

What are the three areas of corporate finance?

OpenStax names working capital management, capital budgeting and capital structure. They cover short-term assets and liabilities, long-term assets, and how the business is financed.

Who is responsible for financial management in a company?

In a larger company, OpenStax describes a controller for financial reporting and accounting, a treasurer for cash flow and outside financing, and a chief financial officer who sets policy. In a small business, the owner may handle all of it, with help from a bookkeeper or accountant.

How is budgeting different from forecasting?

OpenStax describes budgeting as "planning for the amount, sources, and uses of cash." It says forecasting "becomes the process for adapting to those changes" when actual results differ from the budget.

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