What Does a Financial Manager Do?

Who is a Financial Manager?

Financial managers have a responsibility to overseeing the finances of large companies, agencies, and everything in between. Along with their teams, they coordinate accounting and produce financial reports, cash-flow statements, and profit projections.

In order to comply with various laws and regulations, they need to pay attention to details. Aside from working with numbers, finance managers must also help other members of their organization understand their complex reports, which requires significant communication skills.

Finance managers face a competitive job market. Those who can also deal with international finance and the increasingly complex world of financial instruments and securities, including derivatives, will be the most marketable.

What does a financial manager do?

Financial managers are responsible for the financial health of an organization. They prepare financial reports, direct investment activities, and develop strategies and plans for their organization’s long-term financial goals. Finance managers work in many places, including banks and insurance companies.

Finance managers are increasingly helping leaders make decisions that affect the organization, a task that requires analytical skills and excellent communication skills.

Financial managers typically do the following:

  • Supervise employees who prepare financial reports and budgeting
  • Review the company’s financial reports and look for ways to reduce costs
  • Preparation of annual financial statements, business activity reports and forecasts
  • Monitor financial details to ensure legal requirements are met
  • Analyze market trends to find opportunities to expand or acquire other companies
  • Help management in making financial decisions

Finance managers need to understand the issues, tax laws, and regulations specific to their organization or industry. For example, government finance managers need to be experts in resource allocation and budgeting procedures; Healthcare finance managers need to understand billing, reimbursement, and other business matters related to healthcare.

Financial managers

Types of Financial Managers

The following are examples of types of financial managers:

  • Controllers direct the creation of financial reports that summarize and forecast an organization’s financial condition. These reports can include income statements, balance sheets, and analysis of future income or expenses. Controllers are also responsible for producing reports that are required by government agencies that regulate businesses. Controllers often oversee the accounting, auditing, and budget departments of their organization.
  • Treasurers and finance officers direct an organization’s budgets to meet its financial goals. They oversee investments and other capital-raising plans, such as issuing stocks or bonds, to help their organization grow. They also develop financial plans for mergers (two companies merge) and acquisitions (one company buys another).
  • Credit managers oversee an organization’s credit business. You set credit-rating standards, set credit limits, and monitor the collection of overdue receivables.
  • Cash managers monitor and control the flow of money in and out of an organization to meet business and investment needs. For example, you need to forecast whether the organization will have a shortage or surplus of cash.
  • Risk managers use strategies to limit or offset a company’s risk of financial loss or financial uncertainty. The risks that they try to limit include those that arise from currency or commodity price changes.
  • Insurance managers decide how to limit an organization’s losses by protecting against risks, such as disability payments to an employee injured on the job or costs incurred as a result of litigation against the organization.
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What are the skills of a financial manager?

Finance managers gain many skills during their training, experience and day-to-day responsibilities. Successful finance managers master several of the following skills.

  • Leadership
  • Problem solving
  • Communication
  • Analysis
  • Interpersonal skills
  • Mathematical proficiency
  • Attention to detail
  • Organization
  • Technological skills
  • Ability to work independently

1. Leadership

Finance managers work with individuals or as part of a team and generally bring a strong foundation of leading finance teams. Managers know how to enhance efficiency and productivity while maintaining confidence in their ability to move the company forward. Effective leaders demonstrate the ability to direct others and delegate tasks. Good financial managers take charge of situations and form effective solutions to encourage trust in their leadership skills.

2. Problem solving

Whether it is analyzing a budget or calculating the risks of an investment, finance managers are adept at taking action and finding solutions. Managers have a deep understanding of the company’s financial goals and find effective ways to meet those goals without jeopardizing the business.

3. Communication

Since not every person in a company understands complex financial data or documents, effective finance managers must have strong written and verbal communication skills. Finance managers are able to explain complicated formulas or analysis to present information in an accessible manner. Finance managers may work with many departments, and the ability to alter their communication style to easily convey information is a vital skill for successful managers.

4. Analysis

As part of the decision-making process, finance managers demonstrate logical thinking. Effective managers are able to look at all options in order to present a comprehensive, understandable analysis. Finance managers use analytical skills when writing contracts, creating budgets and forecasting profit and loss.

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5. Interpersonal skills

Finance managers work with many other individuals or teams to resolve financial problems. They may oversee activities or tasks and their ability to work seamlessly with other departments and people. Successful finance managers relate well to individuals and motivate teams to complete calculations and analysis with efficiency and accuracy.

6. Mathematical proficiency

Finance managers work with large sums of money and rely on advanced mathematical abilities to compile and analyze data. Proficient finance managers are well versed in algebraic mathematics and have the ability to understand and create formulas. Effective finance managers are knowledgeable of international finance and can decipher a large variety of financial documents.

7. Attention to detail

Finance managers must maintain accuracy when dealing with numbers. Since they oversee how and where a company spends its money, as well as how and where it accumulates profit, finance managers must divide their attention to many financial functions of a business. When writing or analyzing contracts, finance managers require an understanding of domestic and international laws and regulations.

8. Organization

Finance managers work with many different financial documents including spreadsheets, contracts, calculations and projections. The ability to organize information is essential for success as a finance manager as they may need to find and retrieve information as needed.

9. Technological skills

As advancements in technology and automation enter the workplace, finance managers may find themselves working with more than spreadsheets and ledgers. Effective finance managers are comfortable with technology and can easily use various programs and applications to their advantage.

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10. Ability to work independently

Successful finance managers don’t need a lot of supervision because they understand what needs to be accomplished and how to meet the company’s goals. Good finance managers are not only self-starters who can prioritize tasks but their leadership skills enable them to motivate others to work independently as well.

How to improve finance manager skills

Finance managers have opportunities to advance their training and education to create better job roles or command a higher salary. Here are a few ways finance managers can improve their job prospects.

  • Increase technology know-how: Technology is already a large part of workplaces and continues to show steady growth. Finance managers can improve their resumes by taking information technology courses such as learning Structured Query Language (SQL) or planning tools such as Jira or Azure DevOps.
  • Earn an advanced degree: Finance managers usually hold a bachelor’s degree but may consider an advanced degree in economics, finance, or business administration. An advanced degree may open opportunities in global economics or international finance.
  • Earn a certificate or license: Earning either a certificate or license not only lends credibility to your qualifications but also signifies your commitment to your profession. Options include the Chartered Financial Analyst (CFA), Certified Treasury Professional, Certified Management Accountant, or Certified Public Accountant (CPA).
  • Focus on a specialty: Finance managers may choose to narrow their focus into a niche category such as risk management, treasury, insurance, or super forecasting