FUNCTIONS OF A FINANCIAL MANAGER

1. Forecasting the financial requirement - A financial manager must estimate a company's

financial requirements. How much money will be required for acquiring various assets? The
amount will be needed for purchasing fixed assets and meeting working capital needs.
2. Financial Planning - A financial manager has to plan the funds needed in the future. A
financial manager's role includes determining how these funds will be acquired and applied.
3. Procurement of funds – There are a number of sources available for supplying funds. These
sources may be shares, debentures, financial institutions, commercial banks, etc. The selection of
an appropriate source is a delicate task a financial manager have to do. The choice of a wrong
source for funds may create difficulties at a later stage. The pros and cons of various sources
should be analyzed before making a final decision.
4. Allocation of funds - It is the responsibility of finance manager to distribute the funds to
capital expenditure and revenue expenditure. The evaluation of different proposals of project
must be made before making a final decision on investment. Each investment must return a
reasonable quantity of money in order to contribute to the goal of "Wealth Maximization."
5. Maintaining proper liquidity – Financial managers has to maintain liquidity position of the
firm at the peak. By synchronizing the finance inflow and outflow for better liquidity.
6. Dividend decision - Dividend is the portion of earning that is distributed to shareholders in the
form of a portion or a percentage of profit. Dividend policy is the determination of the division
of earnings between payments to shareholders and retained earnings. Every company should
have a clear dividend policy. Formulation of a proper dividend policy is one of major financial
decision taken by the finance manager.
7. Evaluation of Financial Performance - It is equally the function of financial management to
analyze and evaluate the financial performance of the business concern after a definite interval
and to communicate the results to op management. A number of tools and techniques may be
used for such analysis and appraisal.
8. Financial Negotiations - It is also the function of financial management to contact all the
potential suppliers of funds and finalizing the contract through negotiations, talks or other
methods. In this process a number of statutory provisions, rules and assumptions are to be
executed in action. A number of financial institutions, bankers, underwriters, etc., are to be
consulted for reaching an agreement.
9. To ensure proper use of surplus - Financial manager has to make all possible efforts to
enhance the productivity of the capital by discovering the new opportunities of investments. Any
surplus generated through funds invested over a period of time must be used properly. A portion
could be distributed to shareholders in the form of dividends. Practice and tradition should guide
decisions regarding how much to be placed in the hands of shareholders.