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.
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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:
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 so 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 costs imposed by a lawsuit against the company.
Financial managers must usually have a bachelor’s degree and more than 5 years of experience in another business or financial occupation, such as loan officer, accountant, auditor, securities sales agent, or financial analyst. 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. These academic programs help students develop analytical skills and learn financial analysis methods and software.
Financial managers usually have experience in another business or financial occupation, such as loan officer, accountant or 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. Those with extensive experience may start their own consulting firms. Financial managers increasingly assist executives in making decisions that affect the organization, a task for which they need analytical ability.
Excellent communication skills are essential because financial managers must explain and justify complex financial transactions. In preparing and analyzing reports, such as balance sheets and income statements, financial managers must pay attention to detail. Financial managers must be skilled in math, including algebra. An understanding of international finance and complex financial documents also is important. Financial managers deal with a range of information and documents. They must stay organized to their jobs effectively.
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.
Financial management jobs tend to pay well.
An attractive alternative to the hard-charging, pressure-filled investment banking path (M&A, Corporate Finance Advisory, Sales & Trading) is a career in finance management within that same investment bank.
The duties of financial managers vary with their specific titles, which include controller, treasurer or finance officer, credit manager, cash manager, risk and insurance manager, and manager of international banking.
Mitch Pisik, who has held numerous senior management positions, including CEO role of Breckwell Products and has more than 20 years of experience in business development, operations and finance, advises that, "the accounting/financial aspect of the job is the floor - not the ceiling."
A financial manager is in charge of the functions involving money in a large or small organization. While answerable to corporate management or a board of directors, he or she holds authority over decisions regarding income, costs, payroll, investments, mergers, and acquisitions.