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The modern guide to finance management

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The way a company handles its finances is known as financial management. This encompasses anything from how it organizes, invests, or spends its financial wealth. The individual responsible for overseeing all of these tasks and more is the company’s financial manager.

The financial manager job (also known as the finance lead) involves a number of tasks, duties, and responsibilities in order to preserve the financial wellbeing of the organization. This includes; budgeting, reporting, the distribution or investment of the company’s financial resources, implementing money-saving measures, managing the accounting team or department, and aiding senior management with business decisions to help the company achieve its long-term financial goals. 

In this guide, we will look at some of the more specific roles a financial manager might occupy within a company and the various types of financial managers that can be found in different sectors. We will offer tips on how to become a better finance manager and highlight some great software available to help you do your job that much better. 

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Roles & responsibilities

Over the years, as the financial needs of companies started to get more complex, so did the roles and responsibilities of a finance manager. Traditionally speaking, a finance lead used to be mainly responsible for monitoring a company’s financial health but the job has since evolved to take on more strategic and managerial forms.

The responsibilities of a financial manager can be placed into five categories:

1. Monitoring and reporting    

Keeping a watchful eye over the organization’s financial health remains the basis of financial management within a company. A financial manager must prepare or oversee the compiling of data and the preparation of reports, financial statements, financial analysis, income statements, business activity reports, and forecasts. 

They must monitor the company’s financial operations and ensure that everything meets all legal requirements and maintains the necessary compliance standards.

2. Identifying and implementing cost-reduction practices  

With the data and reports in hand, financial managers can better manage company budgets as well as find new ways to help reduce costs.

3. Looking ahead and strategizing

Financial managers also utilize the information they obtain through their data analysis to develop long-term business plans and the appropriate financial planning. They do this together with senior management to ensure the company’s continued prosperity through financial decisions taken.

They also spend significant time and resources analyzing competitors and market trends. Depending on the company’s current financial state, they strategize and advise the board and stakeholders on expansion, acquiring, or investment opportunities. It is therefore important for financial managers with such responsibilities to possess great analytical skills. 

This also includes identifying the best ways to finance the acquisition of any assets such as through debt, equity, or both. 

4. Supervision

Senior financial managers in larger companies normally manage teams of junior accountants who would likely be responsible for carrying out the company’s financial reporting. 

5. Back-office services

The company’s finance management team is also responsible for providing some back-office financial services such as payroll management and overseeing a company’s accounts payable and accounts receivable.

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Types of financial managers

Different companies have varying levels of finance management needs depending on their size, financial goals, and the sector or industry they operate in. Due to the vast range of roles that we have identified above, financial managers are usually employed in more specific positions with more defined roles.

Some types of financial managers include:  

Controllers

Controllers are responsible for the monitoring and reporting side of the work. They prepare financial reports, statements, and forecasts on the company’s future costs or earnings. Finance controllers also ensure compliance with national and international legal requirements and often oversee internal audits too. 

Credit managers

As the name implies, credit managers are in charge of credit business within companies such as banks or credit-granting institutions. They analyze potential creditworthiness in a way to reduce any risks and monitor debt collection. 

Cash managers

Cash management involves monitoring and controlling a company’s cash flow. This includes projecting future cash flow in order to ensure the firm’s financial stability (or lack of) going forward. Understanding the company’s future cash flow situation will help cash managers advise management on when loans are needed or whether or not certain investments can be made. 

Treasurers

When budgets allow for it, a treasurer’s role is to advise and oversee a company’s investment activities in order to raise capital and strengthen its financial position. Investments could include stocks and bonds or even property and fixed assets. A treasurer will also plan and oversee the financial side of company mergers or acquisitions.

Risk managers

A risk manager’s role is to help the company avoid any financial losses or uncertainty. They do this by using risk management strategies such as hedging where the risk of adverse changes in price in one investment is reduced by simultaneously trading in another.

Insurance managers

Insurance managers identify insurance coverage a company needs to obtain in order to reduce risks and losses due to unforeseen circumstances. This could include obtaining policies from insurance companies that will cover payment against any lawsuits taken out against the company.

Finance officer

Entry-level finance professionals holding a bachelor’s degree in finance or business administration normally start out as finance officers. The role is normally administrative in nature, supporting any of the duties we’ve already covered in this guide. Practically all financial managers or even CFOs (chief financial officers) start out as finance officers in order to gain the vital work experience needed to progress in their careers.

What does it take to become a financial manager?

First of all, you would need to obtain the relevant bachelor’s or master’s degrees in finance, accounting, economics or business administration. You would also need to obtain professional certification or accreditation depending on the specific field you’d like to specialize in. Such licenses or certifications include Certified Public Accountants (CPA, Chartered Financial Analysts (CFA), and Certified Treasury Professionals.    

Job seekers reading through financial manager job descriptions are likely to come across a list of interpersonal skills which are vital to succeed in such work environments. These include great analytical skills, communication skills, a knack for problem-solving and negotiation skills. Senior managers must also have strong leadership capabilities.

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