Financial manager have to play the very crucial role for the organization. They have some functions these are given below –
Forecasting and Planning:
The manager needs to forecast the prerequisite of funds for both the short term (working capital requirements) and the long term purpose (capital investments). Forecasting the necessities of funds and making the plans for using the funds involves with the use of budgetary control and long-range planning.
It helps a manager to choose what type of Capital structure the company essentials to have, whether these funds would be raised up from loans/borrowings or from internal source (like share capital). To increase adequate long term funds to funding fixed assets and other long term investments and to arrange for the necessities of working capital.
The manager uses in projects the various capital budgeting tools like Payback method, accounting rate of return, internal rate of return, net present value. Assets management policies are to be laid down concerning the several items of current assets like accounts receivable by synchronizing with the sales personnel, inventory with production.
In that case the manager need to take into consideration, earnings trend, share market price trend, fund requirement for future growth, cash flow situation and others issues to pay the dividends.
Here manager plays an actual important role in resonant out discussions with the numerous financial institutions, banks and public depositors for floating funds on promising terms.
In this point the finance manager essentials to make sure the supply of adequate, timely and cheap fund to the different parts of the organization that there is no extreme cash idling around.
Evaluating financial performance:
The managers need to continually review the financial performance of the different units of organization usually in terms of ROI (return on investment). Such review assists management in seeing own the funds have been operated in the different divisions and what can be done to advance it.
Dealing with pertinent parties in the Financial Markets:
A manger need to concern where the company is a registered entity, the requirement to interrelate with the Stock Exchange; to deal with money markets and capital markets for financing or investment of idling funds; to foster relationships with bankers, investors, underwriters of equity and bond issuance’s and other government regulatory bodies.
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