What are the responsibilities of a Finance Manager? What do they keep doing the whole day? What will be your life like once you become a Finance Manager? What can you improve in your current role as Finance Manager? What makes them come home late every night? If you have any of the above questions in your mind, then this article is written for you. Stop all the distractions around you and start reading it below carefully.
By Finance Manager, we mean someone who is at a mid-career level of Accounting & Finance Profession. He/she may have a different designation that Finance Manager. This article applies to the similar titles like accounting manager, accounts manager, Finance & administration manager, financial Controller, Assistant finance manager, Treasury manager or even Senior Accountant, etc.
Firstly, it is important to realize that the life of all finance managers is NOT the same. There may be significant differences in the work routine of Finance managers depending on various factors like size of the organization, organization structure, sector/industry in which they work in, current business situation, management plans, capability and functionality of current I.T systems and many other things. However, we’ll true to cover the responsibilities of a super busy finance manager who is trying to juggle all responsibilities simultaneously:
This area mainly comprises the preparation of financial reports and getting them audited in coordination with external auditors. Some company may have an annual requirement for audited financials, and some may have to report quarterly results with a review report from external auditors. Financial Reporting is a crucial function and requires significant devotion and time. Preparation of financial statements and resolving auditors’ queries is an essential job and may require several late sittings during audit days. This task requires a full understanding of the accounting system and IAS/IFRS.
Management reporting or internal reporting is usually a monthly job, and it may be even less than that, i.e., on a weekly or even daily basis. If you have set templates for monthly reporting, you may need to update the figures from the latest trial balance. However, a comprehensive management reporting with management commentary is also a vital task and requires significant devotion. Read our detailed article on management reporting here.
For the companies which are listed on a stock exchange, then there would be regulatory reporting requirements from the stock market. For the companies in a specific industry say like, Insurance, the company will have to provide specific reports to Insurance Regulator. If the company is a member of a particular trade association, then it will have to report figures to the trade association. Similarly, a central bank is a main regulatory body for financial institutions. So, depending on the industry, regulatory reporting would affect the responsibilities of the finance manager.
Budgeting & Forecasting
How much money will be spent in the next year or next month on different kind of expenditures? What will be our maximum spend in the pantry? What amount can we maximum afford in the advertisement expense? Well, it is the Finance Manager who answers all these questions. Because it is usually the Finance team, who is responsible for preparing budgets and forecasts for the entity. These budgets and forecasts are prepared usually on a monthly or yearly basis to ensure financial control over the expenditures of the entity. However, we cannot ignore the input of other departments and managers in preparing budgets. We can say that the Finance manager will prepare the budget in coordination with input from other departments.
With the fast changing technology, all systems are becoming obsolete much faster than the original anticipation. With increased demands from the business and the management, there is a requirement of several new reports which existing systems may not be able to provide. With increased competition and for better costing mechanism, there is a requirement for more smart systems. Whenever there is a change in the system, the Finance manager has to play a pivotal role in the successful implementation of the new systems. They have to be involved in all stages of software change/upgrade like planning, expectation setting, data flow designs, implementation, testing and review after implementation.
When the customers have purchased goods/services on credit, and they are not paying themselves. It is usually the Finance team who has to run after them. This chasing and following up to collect the money is a daunting task. In order to achieve this task, Finance Manager will also be looking after all the queries from customers like provision of proper invoices, generating a statement of account, reconciliations, receipts issuance, and allocations.
You may be an ethical finance manager who calls your debtors once in a week to remind them of the outstanding amount due. However, your creditors may not be preferring the same approach. A finance manager may receive calls on a daily basis from the same vendor for the outstanding payment. Payables Management may be one of the hard-hitting areas of the finance managers’ duties where he/she may have to listen or respond to unpleasant calls and emails. For all the conflicts for the account balances and the booked/un-booked invoices, finance manager has to play a critical role to sort out the issues.
Banking & Financial Management
Financial management is an area which exactly coincides with the word ‘Finance Manager.’ Therefore, the importance of this functionality is self-evident. In brief, in this functionality, the finance manager ensures that the finances of the company are well managed. Financial management means that money is appropriately rotated, the bank account is adequately funded, expenses are well controlled, misappropriation of the money is prohibited, revenues are timely collected, payables are suitably managed, and investments are wisely selected.
Do you know how a company decides that what should be the price of their products? Checking the price of a product in a retail market is very easy. However, calculating that price from a company’s perspective is an intricate matter. Do you want to meet the guy who plays a pivotal role in product costing (and thus in product pricing)? Yes, you guessed it right, it is the Finance Manager who is to ensure that proper methods of costing techniques are applied to reach out at the correct pricing for the product.
General ledger maintenance
This section would cover all the accounting entries being passed promptly, in the correct accounts, with correct amounts and correct descriptions. These tasks are usually done by the team under the Finance Manager. However, the Finance Manager has to ensure that the general ledger is being maintained appropriately. Whenever there is missing account code or a new account code to be created, FM has to ensure that it is created in an appropriate category and sub-category. The users of the G.L should have appropriate access rights only.
A finance manager may be managing a team ranging from a couple of staff to more than 50 persons, depending upon the size of the organization. Team management and people management is one of the critical success factors for a finance manager. If the responsibilities are appropriately allocated, and the resources are effectively utilized, it would be easy for the manager to fulfill its responsibilities successfully. However, if the team is not well balanced, not adequately trained or if there are unresolved conflicts among the team, it would significantly hamper the productivity and performance of the finance manager and the whole finance team.
Some organizations may split these responsibilities among different designations like credit controller, costing manager, accounting and reporting manager and finance manager (of course). However, it depends upon the organization’s structure (as stated earlier).
If you are planning to pursue a career as a Finance professional, then the above would give you a hint of how life would be in this career. I can say that a career in Finance is exciting and you’ll have some power being a financial controller of the entity.
If you have already joined the profession and are in an initial stage, the above responsibilities would help you to advance your vision and career. Try to get those responsibilities which are not in your domain yet. The more responsibilities you have, the more valuable you’ll become for the entity.
If you are an owner of an SME business and you are wondering how to hire right finance manager, then don’t base your decision on the right color matching of the tie and the shirt. Instead, try to obtain understanding from the candidates based on the above headings. Let’s know their experience in each of these areas, and this will help you choose the right candidate for the Finance Manager position. The more confident and experienced the candidate is, the better he deserves this position.