December 2017
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The Finance Manager

Definition

A finance manager is responsible for providing financial advice and support to colleagues and clients to enable them to make sound informed business decisions. The role of the finance manager is more than simply accounting; it should be multifunctional.

Finance managers should understand all aspects of the business so that they are able to adequately advise and support the directors and board in any decision-making and ensuring the growth and profitability of the organisation.

Almost every company, government agency, or other type of organization within the private or public sector, need well rounded, qualified expertienced finance managers.

Finance managers oversee the preparation of the financial reports, direct investment activities, and advise and implement cash management strategies. They also assist and advise in the implementing of the long-term goals of their organisation.

Many corporations today have to run multi-functional teams where a finance manager is usually responsible for a particular division or function, or looks after a range of departments and functions. Finance managers often have specific roles and titles:

Financial Controllers prepare financial reports and analyse the results compared to budget, called variance analysis, they prepare the forecasts and summarise the organisation’s financial position. Controllers are also in charge of preparing special reports required by regulatory authorities—especially important because of the Sarbanes–Oxley Act, designed in part to protect investors from fraud. This area of Corporate Governance has become more burdonsome over years.

Treasurers and finance officers sometimes called corporate finance managersdirect and oversee budgets, monitor the investment of funds, manage associated risks, supervise cash management activities, execute capital raising strategies, and deal with mergers and acquisitions.

Risk and insurance managers administer programs to minimise risks and losses that could arise from financial transactions and business operations.

Credit managers supervise the firm’s issuance of credit, fix credit-rating criteria, determine credit limits, and monitor the collection of past-due accounts.

Cash managers supervise and manage the flow of cash receipts and disbursements to meet the business and investment needs.

The role of the finance manager, particularly in business, is changing in response to technological advances that have significantly reduced the time it takes to produce financial reports.

Finance managers now perform more data analysis to offer senior management ideas on how to maximise the profits of the organisation, and for public sector effective value for money ideas. They play an increasingly significant role in mergers and acquisitions and in related financing, and in the areas that require wide-ranging, focused knowledge to diminish risks and maximize profit.

Senior management should always consult with the finance managers where ethical or legal issues may be involved.

Advantages – do not skimp on your finance managers.

Financial managers improve business organisation and risk management by providing reassurance on the effectiveness and efficiency of operations, financial reporting, and compliance with applicable laws and regulations.

Financial managers provide management with an in-depth and unbiased understanding of risks that the organisation may be facing, allowing for preemptive planning.

Financial managers give company officers and directors forewarning of ethical and legal issues that may affect the organisation.

Disadvantages – there has to be some!!

Although they are meant to be independent and impartial, finance managers are paid by the company and are an integral part of the management of the organisation; this can lead to conflicts of interest when advising senior management on, for example, investment risk. An optimistic director may cause the finance manager to be over optimistic.

The Finance manager’s judgments, estimates, and interpretations are not always objective because of their close relationship with the organisation for which they work.

How to find the right manager:

Has the financial manager worked in any related business fields previously and, if so, for how long? What reliable references can be provided? whats their total experience and qualification.

How good is his/her track record on risk assessment and planning for contingencies?

In assessing business processes, how up-to-date is he/she with technology controls in auditing?

Its always a good idea to consult key stakeholders and managers when evaluating and employing new finance managers, so that areas of competence can be checked.