Role of Finance Manager

In the area of finance and financial management, finance manager is important authority. Not only to raise the finance of company, finance manager do also other lots of works for company. We can explain his role in following words. 1. Role of Finance Manager for Raising Funds of Company Finance manager checks different sources of company. He did not get fund from all sources. First, he check his need in short term and in long term and after this he select best source of fund. He has also power to change the capital structure of company for giving more benefit of company. 2. Role of Finance Manager for Taking Maximum Benefits from Leverage Finance manager uses both operating and financial leverage and try to use it for taking maximum benefit from leverage. 3. Role of Finance Manager for International Financial Decision Finance manager finds opportunities in international financial decision. In these opportunities, he does the contracts of credit default swap, interest rate swap and currency swap. 4. Role of Finance Manager in Investment Decisions Finance manager checks the net present value of each investment project before actual investment in it. Net present value of project means what net profit at discount rate, will company gets if company invests him money in that project. High NPV project will be accepted. So, due to high responsibility, role of finance manager in this regard is very important. 5. Role of Finance Manager in Risk Management Happening of risks means facing different losses. Finance manager is very serious on risk and its management. He plays important role to find new and new ways to control risk of company. Like other parts of management, he estimates all his risks, he organize the employees who are responsible to control risk.He also calculates risk adjusted NPV. He meets all risk controlling organisations like insurance companies, rating agencies at pervasive level. He is able to convert company's misfortunes into fortunes. By good estimations of averse situations, he tries his best to safeguard the money of company.
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What Are the Functions of the Corporate Financial Manager?

by Sam Ashe-Edmunds, Demand Media

As a company grows, the responsibilities of the finance manager expand, with more outsourced functions coming in-house and more long-term strategic planning added to the finance manager's plate. Understanding the roles and responsibilities of a corporate finance manager will help you decide if this career is right for you and how to prepare to land these types of finance jobs.

Planning
Unlike a bookkeeper or accountant, a financial manager, often known as a chief financial officer, plans long-term financial strategy for a company, delegating bookkeeping work to lower-level staff. The financial planning aspect of the job includes setting goals for achieving specific revenues, profit margins and gross profits. It also requires setting targets for overhead and production expense levels and debt-service management. The financial manager needs to create a master budget thats tied to the companys balance sheet, accounts receivable and payable reports and cash flow and profit-and-loss statements. The financial manager conducts regular reviews of the master budget, called budget variance analyses, to determine if any changes should be made based on the actual performance of the company vs. its financial projections. Financial managers also determine the best investment options for a businesss excess cash and review ways to acquire capital for expansion or acquisitions.

Cost Containment
A key responsibility of a financial manager is to control the companys expenses. This requires more than simply setting spending levels and cutting costs. Cost containment includes creating requests for proposals, bidding processes and purchasing policies for contractors, vendors and suppliers to ensure the company gets the best combination of quality and price. The financial manager sets benchmarks that determine when its most cost-effective to perform activities using in-house staff and when its better to use contractors. Cost-containment efforts include managing debt to ensure interest payments dont wipe out company profits. Financial managers also create strategies that help reduce a companys tax liability, such as depreciating assets.

Cash Flow Management

One of the most important functions of a financial manager is to project and manage the companys cash flow. Cash flow refers to the actual receipt of money and payment of bills, as opposed to the companys budgeted income and expenses. Assuming that because a business has more income than expenses it can pay its bills can lead to disaster. For example, if the company does not negotiate customer credit terms and vendor and supplier payment terms correctly, the business might be waiting to collect sales invoices long after bills have come due. Cash flow management includes monitoring receivables turnover and keeping enough credit and cash reserves available to keep the company financially stable.

Legal Compliance
The corporate financial manager ensures the business meets all of its legal obligations, such as sales and income tax payments; employee benefits contributions; state and federal labor wage requirements; and Securities and Exchange Commission reporting, if the company is a public corporation. At small and medium-sized businesses, the financial manager often works with tax experts and CPAs who guide the company regarding its legal obligations.
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1.3.1 The Functions of a Finance Manager

The functions of a finance manager can be categorized under the following heads:

1.3.1.1 Forecasting and planning

A finance manager has to forecast and predict the short- and long-term requirement of money by the business and also forecast the activity levels of the various business operations so that it preplans what to manufacture and deliver at what price to the customers. The finance manager has to take these decisions in the light of both the external and internal factors that affect the business activities.

1.3.1.2 Analysing and evaluating the investment activities

A finance manager needs to understand and evaluate the various activities of the business, especially the long-term investment activities. He/she needs to understand the costs and benefits associated with the long-term investments, i.e., their feasibility. As a rule, firms go for those long-term investment activities which generate positive value for the firm and the rest are rejected.

1.3.1.3 Coordination and control

A finance manager focuses on the generation of the funds and their allocation to various organizational activities. The various organizational activities are to be coordinated and controlled to ensure cost effectiveness and maximum efficiency in terms of value generation.

1.3.1.4 Understanding the finance market

The growth and activeness of the Indian capital market ensures that the finance managers can gain immensely from the capital market knowledge. The finance managers have to decide the mode of short-term investments in the money market, and the liquid investments and the long-term investments in the stock market. These investments have to be liquid as well as profitable so that they add value to the firm's invested amount.

1.3.1.5 Risk management

A very important function of a finance manager is to understand risk management of the business. He/she needs to evaluate the risks the business faces. The various risks faced by the firm are to be

managed proactively and necessary arrangements should be made to eliminate, reduce and avoid them. He/she also needs to analyse and categorize the various risks faced by the business.

1.3.1.6 Performance measurement

In the end, a finance manager is supposed to evaluate the performance of his/her firm. The financial performance of the firm is appraised holistically, activity wise and department wise. These performance appraisals are evaluated with the set targets to determine positive and negative deviations, if any.

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