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WHAT ARE THE FUNCTIONS OF FINANCE MANAGER?

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The  Finance  Manager's  main  objective  is  to  manage  funds  in  such  a  way  so  as  to  ensure their  optimum  utilization  and  their  procurement  in  a  manner  that  the  risk,  cost  and  control considerations  are  properly  balanced  in  a  given  situation.  To  achieve  these  objectives  the Finance  Manager  perform  the following functions:  

(1)  Estimating  the  requirement  of  funds:  Both  for  long-term  purposes  i.e.  investment  in fixed  assets  and  for  short  term  i.e.  for  working  capital.  Forecasting  the  requirements  of funds  involves  the  use  of  techniques  of  budgetary  control  and long-  range  planning.

(2)  Decision  regarding  Capital  Structure:  Once  the  requirement  of  funds  has  been estimated,  a  decision  regarding  various  sources  from  which  these  funds  would  be raised  has  to  be  taken.  A  proper  balance  has  to  be  made  between  the  loan  funds  and own  funds.  He  has  to  ensure  that  he  raises  sufficient  long  term  funds  to  finance  fixed assets  and  other  long  term  investments  and  to  provide  for  the  needs  of  working capital.

(3)  Investment  Decision:  The  investment  of  funds,  in  a  project  has  to  be  made  after careful  assessment  of  the  various  projects  through  capital  budgeting.  Assets management  policies  are  to  be  laid  down  regarding  various  items  of  current  assets. For  e.g.  receivable  in  coordination  with  sales  manager,  inventory  in  coordination  with production  manager.

(4)  Dividend  decision:  The  finance  manager  is  concerned  with  the  decision  as  to  how much  to  retain  and  what  portion  to  pay  as  dividend  depending  on  the  company's

policy.  Trend  of  earnings,  trend  of  share  market  prices,  requirement  of  funds  for  future growth,  cash  flow  situation  etc. are also to be  considered.

(5)  Evaluating  financial  performance:  A  finance  manager  has  to  constantly  review  the financial  performance  of  the various  unit of  organization generally  in terms  of  ROI Such  a  review  helps  the  management  in  seeing  how  the  funds  have  been  utilized  in various  divisions  and  what  can  be  done to improve it.

(6)  Financial  negotiation:  The  finance  managers  play  a  very  important  role  in  carrying  out negotiations  with  the  financial  institutions,  banks  and  public  depositors  for  raising  of funds  on  favorable terms.

(7)  Cash  management:  The  finance  manager  lays  down  the  cash  management  and  cash disbursement  policies  with  a  view  to  supply  adequate  funds  to  all  units  of  organization and  to  ensure  that there  is  no excessive  cash.

(8)  Keeping  touch  with  stock  exchange:  Finance  manager  is  required  to  analyse  major trends  in  stock  market  and  their  impact  on the  price of  the share.

(9)  Mergers  &  Acquisitions.

(10)  Mobilization  of  needed  funds  for  the  business.

(11)  Deployment  of  the funds  as  per  budget  allocation

(12)  Control  over  proper  use  of  the  Funds

(13)  Risk-return  Trade off

(14)  Financial  negotiations

(15)  Interface  with  other  functions  To  Management  like  Production,  Personal,  and Marketing  etc.

Thus  the  key  challenges  to  finance manager  appear  to  be in following  area:

■ Investment  planning 

■ Financial  Structure

■ Treasury  Operations

■ Foreign  exchange  risk  management

■ Investor  communication

■ Management control

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