What is a Financial Manager?
Table of Contents
Financial managers are responsible for the financial health of an organization. They produce financial reports, direct investment activities, and develop strategies and plans for the long-term financial goals of their organization. Financial managers work in many places, including banks and insurance companies.
Financial managers increasingly assist executives in making decisions that affect the organization, a task for which they need analytical ability and excellent communication skills.
How to Become a Financial Manager
What does a Financial Manager do?
The role of the financial manager, particularly in business, is changing in response to technological advances that have significantly reduced the amount of time it takes to produce financial reports. Financial managers’ main responsibility used to be monitoring a company’s finances, but they now do more data analysis and advise senior managers on ideas to maximize profits. They often work on teams, acting as business advisors to top executives. Financial managers typically do the following:
- Prepare financial statements, business activity reports, and forecasts
- Monitor financial details to ensure that legal requirements are met
- Supervise employees who do financial reporting and budgeting
- Review company financial reports and seek ways to reduce costs
- Analyze market trends to find opportunities for expansion or for acquiring other companies
- Help management make financial decisions
Financial managers also do tasks that are specific to their organization or industry. For example, government financial managers must be experts on government appropriations and budgeting processes, and healthcare financial managers must know about issues in healthcare finance. Moreover, financial managers must be aware of special tax laws and regulations that affect their industry.
The following are examples of types of financial managers:
Controllers direct the preparation of financial reports that summarize and forecast the organization's financial position, such as income statements, balance sheets, and analyses of future earnings or expenses. Controllers also are in charge of preparing special reports required by governmental agencies that regulate businesses. Often, controllers oversee the accounting, audit, and budget departments.
Treasurers and finance officers direct their organization's budgets to meet its financial goals. They oversee the investment of funds. They carry out strategies to raise capital (such as issuing stocks or bonds) to support the firm's expansion. They also develop financial plans for mergers (two companies joining together) and acquisitions (one company buying another).
Credit managers oversee the firm's credit business. They set credit-rating criteria, determine credit ceilings, and monitor the collections of past-due accounts.
Cash managers monitor and control the flow of cash that comes in and goes out of the company to meet the company's business and investment needs. For example, they must project cash flow (amounts coming in and going out) to determine whether the company will not have enough cash (and will need a loan), or will have more cash than needed (and can invest some of its money).
Risk managers control financial risk by using hedging and other strategies to limit or offset the probability of a financial loss or a company’s exposure to financial uncertainty. Among the risks they try to limit are those due to currency or commodity price changes.
Insurance managers decide how best to limit a company’s losses by obtaining insurance against risks such as the need to make disability payments for an employee who gets hurt on the job, and any costs imposed by a lawsuit against the company.
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How to Become a Financial Manager
A bachelor's degree in finance, accounting, economics, or business administration is often the minimum education needed for financial managers. However, many employers now seek candidates with a master's degree, preferably in business administration, finance, or economics.
Financial managers typically have more than five years of experience in another business or financial occupation, such as loan officer, accountant, auditor, securities sales agent, or financial analyst. In some cases, companies provide formal management training programs to help prepare highly motivated and skilled financial workers to become financial managers.
Because financial management is so important in keeping business operations efficient, experienced financial managers who display a strong grasp of the operations of various departments within their organization may be promoted to management positions. Some financial managers transfer to closely related positions in other industries, and those with extensive experience may start their own consulting firms.
What is the workplace of a Financial Manager like?
Financial managers work closely with top executives and with departments that develop the data that financial managers need. They can be employed in many different environments including both public and private sectors, such as multinational corporations, retailers, financial institutions, NHS trusts, charities, manufacturing companies, universities, and general businesses.