DEFINITION of 'Strategic Financial Management '

Managing an organization's financial resources so as to achieve its business objectives and

maximize its value. Strategic financial management involves a defined sequence of steps
that encompasses the full range of a company's finances, from setting out objectives and
identifying resources, analyzing data and making financial decisions, to tracking the
variance between actual and budgeted results and identifying the reasons for this variance.
The term "strategic" means that this approach to financial management has a long-term
horizon.

INVESTOPEDIA EXPLAINS 'Strategic Financial Management '

At the most fundamental level, financial management is concerned with managing an
organization's assets, liabilities, revenues, profitability and cash flow. Strategic financial
management goes a step further in ensuring that the organization remains on track to attain
its short-term and long-term goals, while maximizing value for its shareholders.

Strategic financial management also means that short-term goals may occasionally need to
be sacrificed to meet longer-term objectives. A typical example is when a loss-making
company trims its asset base through factory closures or headcount reduction in order to
reduce operating expenses. While such actions have a detrimental effect on near-term
results because of restructuring costs and other one-time items, it positions the company to
achieve profitability in the longer term.