Role of the Financial Manager

Role of the Financial Manager

Financial managers wear many hats. They oversee the preparation of financial reports, direct investment activities, and implement cash management strategies. Each day there are new organizational paths and computer programs being perfected to record and organize data. Many financial managers are spending more time developing strategies and implementing the long-term goals of their organization. According to Brealey, Myers, and Marcus “Financial Managers are faced with two basic problems. First, how much money should the firm invest, and what specific assets should the firm invest in?” The duties of financial managers change with their roles.

Chief Financial Officers, are the top financial executives of an organization. They oversee all financial and accounting functions and formulate and administer the organization's overall financial plans and policies. In small firms, CFOs usually handle all financial management functions. In large firms, they direct these activities through other financial managers who head each financial department. A chief financial officer is primarily responsible for financial planning and record-keeping. This role has expanded to encompass communicating financial performance and forecasts to the analyst community. The Controller is responsible for all aspects of the agency accounting and reporting process. This includes, but is not limited to, the following: Prepare financial statements in compliance with GAAP, as well as various reports for all key aspects of the agency’s financial affairs, including variance reports which accurately account for differences in budgets and forecasts. Ensure Sarbanes-Oxley compliance and process documentation.

The controller reconciles and analyze all accounts each month, ensuring that all corporate reporting packages and internal reports are accurate, timely, and in compliance with GAAP and internal policies. They also oversee and assist in all accounting systems functions, policies, and procedures, including closing cycles, financial audits and corporate information requests; manages the general ledger accounting system, including report development and dissemination, and control and documentation of transactions. A treasurer, receives and keeps accurate records of money received and disbursed within the corporation. Credit managers oversee the flow of financial instruments, monitor the extension of credit, establish credit rating criteria, establish credit ceilings, assess risk of transactions, raise capital, analyze investments, and control flow of cash receipts and disbursements. Also, they analyze cash flow projections to determine if loans are needed to meet cash requirements. Finally, some credit managers prepare financial operating reports to ensure that the firm satisfies tax and regulatory requirements. The cash manager manages the cash transactions. All these roles have one thing in common: proper management and distribution of company finances.

The average employee or stockholder have a slightly different outlook.

In a world where corporate restructuring is a common as paper clips, stockholders need to know what direction the company is going to take and will their investment be safe. Finance managers want/need to keep expenses low and returns high as this adds value to the company that is passed onto the investors. The dividend is the most important way the business fulfills this mission. When a company earns a profit, some of this money is typically reinvested in the business and called retained earnings, and some of it can be paid to its shareholders as a dividend. Paying dividends reduces the amount of cash available to the business, but the distribution of profit to the owners is, after all, the purpose of the business. Some companies pay stock dividends rather than cash dividends, in which case