The role of the financial manager (FM) varies according to the size of the company involved. In general, they oversee most of the financial aspects of the company and are responsible for the flow of accurate and timeous financial data to the company stake holders. Financial managers need to be able to provide accurate and relevant information for internal purposes for use by the CEO and CFO in order to make informed decisions or be communicated to external parties such as shareholders, investors, banks or financing / lending institutions.
It is the responsibility of financial managers to surround themselves with the right teams and implement systems that get the job done. To get this right they needs a sound knowledge of the day-to-day operational areas that are critical in all businesses, such as working capital management, margin improvement, controls, systems and reporting. The financial manager’s role is essentially “hands on” in nature and should not be confused with the Financial Director role which is more strategic in nature. Having said that, no Financial Director role can be effectively executed without an excellent Financial Manager(s) and related finance team reporting through to him / her.
Responsibilities that need to be covered in the financial manager (FM) job description. While this is not meant to be an exhaustive list of all responsibilities we feel that the following four main functions are critically important and certainly do need to be incorporated:
- Define financial requirements against mandated goals and objectives; how annual and longer-term goals and objectives can be met through the use of financial resources, and translate these into specific financial commitments.
- Assess these requirements in financial terms, determining what is achievable using available financial resources through costing all aspects of these requirements.
- Provide a roadmap to support the budgeting process.
- Forecast estimates for the predicted use of financial resources against the budgeted financial resources during a given fiscal year or period.
- Allocate funds to specific accounts in the chart of accounts.
- Monitor the actual use of financial resources against the approved budget and identify variances.
- Adjust the approved budget under directives from appropriate management and/or in response to variances between planned and actual expenditures.
- Report findings and action taken to the appropriate authorities.
Management & Control
- Comply with the legal and statutory framework of policies, business processes, procedures and standards pertaining to recording, classifying, monitoring, and reporting on use and disposition of financial resources.
- Establish, maintain, and apply an institution-specific framework of policies, business processes, procedures and standards pertaining to recording, classifying, monitoring, and reporting on the use and disposition of financial resources.
- Produce financial reporting which is the recording and presentation of financial statements that show the organization’s financial position, operating performance and cash flow over a period of time through the use of financial statements.
- Create management reports on a regular basis that are relevant to decision-making processes, measuring performance against measures and targets (output and outcomes) established during finance management planning, against budget objectives, and/or against financial management performance standards used within the industry.
- Evaluating and analyzing findings, and exploring options for corrective action.
The benefits of using a part-time or interim Financial Manager (FM)
With the ever changing business landscape more and more South African companies are choosing to outsource the position of financial manager in line with International trends. There are a few reasons for this:
Full time, quality Financial Managers come at a huge expense to a company. These costs can be prohibitive to most SME’s and while the business certainly does need the expertise to grow and expand it is sometimes very difficult to justify the expense of a full time resource. The part time offering allows the company access to these required financial skills at a fraction of the cost. There are no up-front placement fees and clients are charged an all-inclusive hourly rate with none of the hidden costs associated with full time employment that can add 20% to 50% to your cost to company salary bill.
Companies that specialise in the provision of these services are typically owned and managed by seasoned CA’s who have had many years working as FM’s and FD’s and know what to look for when it comes to financial talent. They only employ individuals who have had the necessary experience to deliver great value to the client from day one of any engagement.
For the part time / interim model to work effectively, the service offering needs to be delivered on a flexible platform. A more intense involvement in the early stages followed by a less intense involvement on going is the norm for most engagements. The individuals who are employed by these consultancies do so because their lifestyles / needs are not conducive to full time employment.
Outsourcing the financial manager position is effective in cutting down on administrative processes. By engaging a part-time or interim financial manager the company can avoid long contractual agreements, taxation complications, medical aid and provident fund contributions and leave provisions. Typical contract periods are month to month which further reduces the risks associated with a full time employment.
The right fit
The employment process is a bit like playing Russian roulette. The majority of placement consultants are not financial professionals and leave the hard decisions to the FD or HR manager after providing a mountain of CV’s to wade through. In our experience, even great looking CV’s with fantastic references and outstanding psychometric test results can be disappointing when it comes to delivery and a 3 month probation period can be a very limited time to make a full assessment as to ability.
A financial management consultancy employs its own staff and as a result of having a core group of permanent resources that have worked together for some time and gone through a stringent selection process, are more suited to make the call on the right individual for your business. There is no guarantee that they will be able to get this fit correct 100% of the time but at least there is the option of swopping the resource out with a more suitable candidate should the need arise. There is no such option with full time placements and the only options that are available tend to be very expensive ones.