Most of the time, the people in charge of a company’s finances have offices close to the executive suite. They have access to high-tech tools that help them be creative, and they travel all over the country to meet with business partners. This article discusses in detail about role of finance manager.
The job of the finance manager is important for the success of any business. They keep track of finances, follow budgets, and look at balance sheets to help decide how to use resources. A finance manager may have to prepare tax returns on top of overseeing accounting staff, teaching employees about money matters, and filing tax returns. To be successful in this role, you need a deep understanding of accounting concepts and strong analytical skills. With the help of this blog, you can find out more about what a finance manager does and how they do it. Read more about risk management in banking sector to broaden your knowledge base.
Role of Finance Manager
Finance Managers help the rest of the company understand the numbers by breaking them down and making them easier to understand. In addition to coordinating accounting, they create financial accounts, flow charts, and profit forecasts based on different rules. In this article, we will discuss about role of finance manager in brief with examples for your better understanding.
Controllers
In charge of making sure that income statements, balance sheets, projections of future income or expenses, and other financial reports that show the financial health of the organization are made. Controllers also have to put together special reports that regulatory agencies need. In many places of business, the controller is in charge of the finance, audit, and accounting teams.
Insurance Managers
Find the best way to buy insurance to reduce the company’s losses, such as protection against the cost of disability benefits for an employee who gets hurt on the job and legal defense costs. The role of finance manager is crucial in any organization, as they are responsible for managing the financial health of the company.
Plans to Maximize Earnings
Even though the main goal of any business is to make as much money as possible, there needs to be strategic planning for making money. For a business to be successful in the long run, it needs to be able to make money. When people say “profit planning,” they usually mean making good use of the money they make.
Profitability is affected by many things, such as market competition, price, the economy, cost and output, and the way the demand and supply chain works. The fixed and variable parts of production need to work well together. Because of this, the company’s bottom line gets better. Things like land and equipment being used result in fixed costs. Regularly looking at the cost of depreciation of fixed production costs is also necessary. On the other hand, you can avoid all of these costs.
Treasury and the Head of Finance
A company’s treasurer is in charge of the company’s money. This person is in charge of cash flow, making sure that statements match up, choosing a bank, and making reports. In smaller businesses, it’s not unusual for the same person to be both the treasurer and the director of finances. As a top executive, the CFO is in charge of the accounting and financial processes of the company.
They are in charge of telling the CEO and the Board of Directors about things. The role of finance manager also involves overseeing the organization’s investment strategy and ensuring that investments are made wisely.
Financial Analysis and Reporting
The finance manager is in charge of financial reports and presentations, as well as decisions about pricing, expansion, leasing, buying, and other things. In addition to financial analysis and reporting on the company’s overall performance, the finance manager is in charge of making reports for shareholders, outside stakeholders, and the board.
The jobs listed above show how many different options there are for people who want to work in financial services. Online finance classes can teach you about all the different things a financial manager is responsible for, so you can choose the field that fits your skills and interests the best.
Managers of Cash
Keep track of and manage the company’s cash flow so that it can pay for all of its operating and investment needs. For example, they have to predict cash flow (the amount of money coming in and going out) to see if the business will run out of money and need a loan or if it will have more money than it needs (and can invest some of its money).
Risk Management
When there is a risk, there are many bad things that could happen. The financial manager thinks about the risk of loss and how to reduce it as much as possible. He helps come up with new ways to look at threats and figure out how to deal with them. Those in charge of managing all risks estimate them and set up the risk management process in the same way as other parts of management.
Also calculated is the net present value that takes risk into account. He has a lot of contacts with insurance companies, credit bureaus, and other groups that deal with risk regulation. With his help, a company’s bad luck can be turned around. He does everything he can to keep the company’s resources safe by trying to predict problems before they happen.
Optimize Usage of Leverage
The goal of using both financial and operational leverage by the finance manager is to get the most out of these advantages. A finance manager’s job is to look for ways to make money in the context of making global financial policy. He uses credit default swap, currency swap, and interest rate swap agreements in these situations. The role of finance manager includes managing relationships with external stakeholders, such as banks, investors, and auditors.
Making Plans and Budgets
The finance manager is in charge of a wide range of tasks, such as forecasting, making changes to forecasts, analysing deviations from standards, making reports, and reviewing the entity’s overall financial performance. To do these things, he needs to be able to work well with others and communicate well.
Raising Funds
The finance manager’s job is to look at data from different places in the company. We can say for sure that not everyone was eager to give him money. First, he figures out what his current and future financial needs are, and then he chooses a good way to get money. As part of his power, he can change the way the company uses its capital to make more money.
Choices about Investments
Financial managers figure out the NPV before deciding whether or not to invest in a chance. At a certain discount rate, a project with a positive net present value is one that makes a net profit. Only projects that can be paid for will be approved. Due to the seriousness of the situation, the role of the finance manager is very important.
Taxation and Legal
The finance manager must work with auditors and tax consultants to complete direct and indirect tax duties and file returns for TDS, Service Tax, GST, and other taxes. He is in charge of making sure that everyone pays their taxes on time and sends in their tax returns. He must also be in charge of regular audits and meet with tax officials and auditors.
Activities for the Last Month
Making balance sheets and trade and income statements are two examples. he financial manager ensures monthly book closure, balances money, and makes provisions while ensuring regional and corporate offices work together. The company uploads the financial statements and sets up meetings to evaluate its own performance.
Frequently Asked Questions
What do you mean by Financial Management?
At its most basic, financial management is the process of allocating a company’s money in a way that helps it make the most money and money back (ROI). Experts in financial management oversee, organize, and plan for all of a business’s activities.
What are the Main Things a Finance Manager has to Worry About?
The company’s ability to meet its obligations depends on how stable its finances are and how much cash it has on hand. Companies can get money to run their businesses by using both the stock market and the debt market. The ratio of debt to equity is an important metric for financial management. Keep your equity level above your debt level to stay out of trouble.
Excessive debt, or fear of future financial issues can cause financial problems. Some people get into trouble with stress and debt because of their gambling habits. Be smart and responsible about how you spend your money.
Conclusion
Members of the finance team have a moral duty to act as hosts, keep their integrity, and stay away from personal and professional conflicts of interest. For full and accurate disclosure, they must make sure that the information they give is always up-to-date, correct, fair, and easy to understand. They must be honest, use what they know, be careful, and never try to trick other people on purpose. The role of finance manager will be covered in-depth in this article, along with some examples for your convenience.
