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Defining the Financial Manager’s Role
This checklist outlines the role of the financial manager.
A financial manager is responsible for providing financial advice and support to colleagues and clients toenable them to make sound business decisions. The role of the financial manager is more than simplyaccounting; it is multifunctional. Financial managers must understand all aspects of the business so thatthey are able to adequately advise and support the chief executive officer in decision-making and ensuringcompany growth and profitability.Almost every firm, government agency, or other type of organization has one or more financial managers.Financial managers oversee the preparation of financial reports, direct investment activities, and implementcash management strategies. They also implement the long-term goals of their organization.Many corporations operate multifunctional teams where the financial manager is responsible for a particulardivision or function, or looks after a range of departments and functions. Financial managers often havespecific roles and titles:
prepare financial reports and analyses of future earnings or expenses that summarize theorganization’s financial position. Controllers are also in charge of preparing special reports required byregulatory authorities—especially important because of the Sarbanes–Oxley Act, designed in part to protectinvestors from fraud.
Treasurers and finance officers
direct and oversee budgets, monitor the investment of funds, manageassociated risks, supervise cash management activities, execute capital raising strategies, and deal withmergers and acquisitions.
Risk and insurance managers
administer programs to minimize risks and losses that could arise fromfinancial transactions and business operations.
supervise the firm’s issuance of credit, fix credit-rating criteria, determine credit limits, andmonitor the collection of past-due accounts.
supervise and manage the flow of cash receipts and disbursements to meet business andinvestment needs.The financial manager’s role, particularly in business, is changing in response to technological advances thathave significantly reduced the time it takes to produce financial reports. Financial managers now performmore data analysis to offer senior management ideas on how to maximize profits. They play an increasinglysignificant role in mergers and acquisitions and in related financing, and in areas that require wide-ranging,focused knowledge to diminish risks and maximize profit.
•Financial managers improve business organization and risk management by providing reassurance onthe effectiveness and efficiency of operations, financial reporting, and compliance with applicable lawsand regulations.•Financial managers provide management with an in-depth and unbiased understanding of risks thatthe organization may be facing, allowing for preemptive planning.•Financial managers give company officers and directors forewarning of ethical and legal issues thatmay affect the organization.