What is the role of the modern day finance manager?

Since most managerial decisions are measured in financial terms, the modern day finance manager plays a key role within the company.  The role is a strategic one and should not be confused with accounting and book keeping functions. A finance manager role should primarily be focussed on just that, management.

Today, external factors have an increasing impact on the financial manager. Heightened corporate competition, technological change, volatility in inflation and interest rates, worldwide economic uncertainty, fluctuating exchange rates, tax law changes and ethical concerns must be dealt with on a daily basis. As a result, the finance manager is required to play an ever more strategic role within the organisation. The finance manager has emerged as a team player in the overall effort of a company to create value. The “old ways of doing things” simply are not good enough in a world where old ways quickly become obsolete. Today’s financial manager must have the flexibility to adapt to the changing external environment if his or her company is to survive.

Understanding the differences between financial management and the other accounting activities within the organisation is key to understanding the role of the modern day finance manager.

The role of the finance manager

The first objective of the accounting activity is to deliver information necessary for the measurement of the company’s performance. Using some generally accepted and regulated standards and principles, the accountants prepare the financial statements that establish the profit based only on the registered sales and expenses. On the other hand, the financial manager focuses on the actual entries and issues of cash flow that are related to such income and expenses. He/she keeps the company solvent by analysing and planning the cash flows necessary for paying the obligations and purchasing the assets needed by the company to reach its financial objectives. If the individuals involved in the accounting activities focus on collecting information and presenting the financial statements, the financial manager evaluates the situations elaborated by the accounting activity, creates additional information and takes decisions based on subsequent analyses. The purpose of the financial activity is to provide correct and easily interpretable information about the company’s past, present and future operations. The financial manager uses this information, either in its basic form, or after certain processing and analyses, as important entries in the decision making process.

Reporting

A good finance manager should produce financial reports that show the organisation’s financial position, operating performance and cash flow over a period of time through the use of meaningful financial statements. He / She should 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 an industry.

Need an experienced finance manager but your budget or scope of work is limited?

Many companies are in need of an experienced finance manager to help guide them but can’t afford to engage with them on a full time basis or the scope of work simply does not justify employing a finance manager on a full time basis. There are companies that offer solutions to both of these challenges by outsourcing exceptional finance managers on a part time or interim basis.

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