Role of the Financial Manager
The role of the financial manager is perhaps one of the most important roles within every company. Although the financial manager is called different names depending on the company, the role is to plan for the short-term and long-term financial plans within the company. In essence, the role of a financial manager is to plan for the upcoming financial projects and to set aside enough funds to secure the financial stability of the company for now and for the long term.
Due to the nature of the role of the financial manager, it is important that the financial manager be inline with the long range goals of the company. Therefore, the financial manager must take direction from the Chief Executive Officer and the board of directors. Without the alignment of the management of the company and the financial manager, there may be a problem with allocating enough funds for not only the day to day operation of the company, but also for the projects in which the company will want to undertake for its long term path of the company.
Some of the items in which the financial manager will need to assist with is capital budgeting. This is the decision of projects to undertake in order to maximize shareholder's value. Another item needed by the role is that of financing. Financing decisions involve the balance of taking on loans to fund the projects undertaken by the company. Certainly, the financing will help undertake these projects, but the financial manager must ensure the repayment of these loans do not hinder the company’s ability to fund its day to day operation. Lastly, if the company has a dividend policy, which will share the company's profits with its shareholders, this is also influenced by the role of the financial manager.
In summary, the role of the financial manager is one that ensures the fiscal future of the company. Through the use of financing decisions, the financial manager plays a big role in determining the ongoing health of the company. The shareholders of a company are reliant on the financial manager to make the correct decisions to maximize stockholder's wealth. This is a balancing act of capital budgeting, financing, and dividend policy to fund the daily operations, short-term goals, and long-term goals of the organization. Therefore, the financial manager plays a critical role within the company in a way that is necessary for the company's success.
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