The relationship between financial management and other functional areas can be defined as follows:
1. Financial Management and Production Department: The financial management and the production department are interrelated. The production department of any firm is concerned with the production cycle, skilled and unskilled labour, storage of finished goods, capacity utilisation, etc. and the cost of production assumes a substantial portion of the total cost.
The production department has to take various decisions like replacing machinery, installation of safety devices, etc. and all the decisions have financial implications.
2. Financial Management and Material Department: The financial management and the material department are also interrelated. Material department covers the areas such as storage, maintenance and supply of materials and stores, procurement etc.
The finance manager and material manager in a firm may come together while determining Economic Order Quantity, safety level, storing place requirement, stores personnel requirement, etc. The costs of all these aspects are to be evaluated so the finance manager may come forward to help the material manager.
3. Financial Management and Personnel Department: The personnel department is entrusted with the responsibility of recruitment, training and placement of the staff. This department is also concerned with the welfare of the employees and their families. This department works with finance manager to evaluate employees’ welfare, revision of their pay scale, incentive schemes, etc.
4. Financial Management and Marketing Department: The marketing department is concerned with the selling of goods and services to the customers. It is entrusted with framing marketing, selling, advertising and other related policies to achieve the sales target. It is also required to frame policies to maintain and increase the market share, to create a brand name etc. For all this finance is required, so the finance manager has to play an active role for interacting with the marketing department.