Financial Managers

9 Key excerpts on "Financial Managers"

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  eBook - ePub

  Financial Management

  An Introduction

  • Jim McMenamin(Author)
  • 2002(Publication Date)
  • Routledge

    (Publisher)

  the effective management of the finance function and for ensuring that the function fully contributes to the successful management of the enterprise.

  The financial manager while a financial specialist , is also a team player as he or she will be a key member of the senior management team. This team role will require effective interpersonal as well as technical skills in contributing to the overall management of the organisation and its goal of value maximisation.

  It should be noted that, in other than small organisations, the various functions and responsibilities of the financial manager are likely to be shared among a number of specialist staff. In small enterprises the financial manager is likely to be a 'jack of all trades', being responsible for the conventional financial and management accounting functions as well as financial management.

  Specifically the financial manager will be intimately involved, and bring his/her specialist skills to bear, in all the stages of the financial management process ; financial analysis, financial decision-making, financial planning and financial control. Some specific responsibilities of the financial manager's function, depending upon organisational structure and size, will include:

  1 Funds management . This is perhaps the primary function and includes the effective and efficient acquisition, allocation

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  eBook - ePub

  Fundamentals of Finance

  Financial institutions and markets, personal finance, financial management

  • Carolyn Wirth, Jenny Parry, Andrea Bennett(Authors)
  • 2021(Publication Date)
  • Massey University Press

    (Publisher)

  The process of financial management does not occur in isolation. The financial markets, regulatory bodies and government authorities all have an influence. It is through financial markets that firms raise funds, and the market price of the firm’s shares is set by buyers and sellers. Regulatory bodies and government authorities impose a constraint on business activities through taxes, business laws and regulations. Financial Managers must consider these external factors and assess the expected risk and return of outcomes as part of the decision-making process.

  Role of financial management

  The finance function is described by a variety of titles such as financial management, business finance, corporate finance and managerial finance. For the most part, these titles are interchangeable as they all relate to the subject of finance. In this section of the book, the term financial management will be used.

  Financial management

  Financial management can be described as the activities and decisions undertaken with regard to the financing and investment requirements of an organisation. This definition allows us to classify the activities and decisions into three principal functions:

  • financial forecasting and planning

  • financing the firm

  • investment in assets.

  These functions are particularly important as the decisions made can have a significant effect on the value of the organisation.

  Financial forecasting and planning

  Financial forecasting and planning is an ongoing process of forecasting financial performance, planning the sources and uses of funds, and monitoring cash flows. It forms the necessary foundation for decisions concerning the investment and financing activities of the firm, and involves planning the funding requirements of the operational activities given the availability of funds from internal and external sources.

  Financing the firm

  Financing the firm involves obtaining funds for use in the business. Funds can be raised internally through the profits and excess cash flows generated by the business, to the extent that they have not already been paid out to shareholders as dividends. Alternatively, financing can be obtained externally via the financial markets. External sources include debt funds such as bank overdrafts, loans and debentures, and equity funds such as owners’ contributed capital. The proportion of debt versus equity funding affects not only the cost of financing but also the profitability and risk of the business, so the debt–equity mix must be carefully managed. For example, the excessive reliance by firms on debt financing was a major factor contributing to the sharemarket crash of 1987. Chapter 10

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  eBook - ePub

  The Chief Financial Officer and Corporate Performance

  Finance, Governance and Risk

  • El?bieta Bukalska, Anna Wawryszuk-Misztal, Tomasz Sosnowski(Authors)
  • 2024(Publication Date)
  • Routledge

    (Publisher)

  Financial management is connected with financial resources and processes. Financial resources refer to cash but also each resource that its value might be presented in money. Financial management needs professional knowledge as the company's finance are connected to the real goods market and financial market. There are different financial institutions and financial instruments. There are also some basic issues, e.g.: financial statements, relations between risk and rate of return, relations between managers and owners, and cost of capital.

  The scope of financial management includes capital collecting and capital allocating decisions. However, these decisions should be aligned with the general aim and strategy of the company. The decomposition of the financial manager functions leads to the identification of several activities such as financial planning, capital budgeting, raising funds, cash management, financial controlling, and financial statement preparation.

  When financial management, the director is supposed to cooperate with internal and external stakeholders. For a long time, the financial director was supported by other directors, but recently its role and power have increased.

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  Technology Entrepreneurship

  Creating, Capturing, and Protecting Value

  • Thomas N. Duening, Robert A. Hisrich, Michael A. Lechter(Authors)
  • 2009(Publication Date)
  • Academic Press

    (Publisher)

  Cash management within the firm is the entrepreneur's responsibility. As a discipline within a business school, finance is the study of how to manage money—either from a personal perspective or from a business perspective. At the personal level, finance is concerned with household wealth management, including things like savings accounts, mortgages, mutual fund investments, and others. Within a business, finance is the functional area charged with locating and acquiring capital for the business, managing capital in a disciplined manner, and determining the best uses of capital given the strategies and goals of the venture. There are vast differences between personal finance and business finance. And there are substantial differences between corporate finance and entrepreneurial finance. The latter, of course, will be our primary concern in this chapter. 12.2.1. The Financial Manager The financial manager is the individual responsible for the venture's finance function. It is common for large firms to use the title of chief financial officer (CFO) to refer to the person in charge of a firm's financial affairs. Many entrepreneurial ventures do not formally appoint a financial manager, but the financial management tasks must still be performed. In entrepreneurial ventures, one of the managers or owners often will handle these tasks

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  Enterprise Planning and Development

  • David Butler(Author)
  • 2006(Publication Date)
  • Routledge

    (Publisher)

  Planning and Managing the Business Finances

  DOI: 10.4324/9780080462851-10

  Financial Planning

  Financial planning is a fairly generic term which covers a range of different activities, from the initial estimating of resource requirements and associated costs, forecasting sales revenue, identifying on-going operating costs, and preparing the budgetary plans which combine the former information. It also involves cash-flow forecasting to ensure that there are no gaps between income and expenditure, analysing break-even levels, and forecasting profits.

  It is because the process draws together all of the other aspects of planning the business, and then expressing those plans in monetary form, that it is so important to prepare correctly, as it is the primary point of interest for bankers and any other potential lenders or investors, and is usually the first thing they will focus on when reading a business plan. If the financial forecasts do not look to be sufficiently detailed or realistic then it is highly likely that the business plan will be rejected or at least referred back for more information.

  The objective of this chapter is to describe the various processes involved, and the reasoning behind them, so that the reader is in a position to prepare the necessary information for his or her own business plan, in particular the budgetary plan, cash-flow forecasts, and break-even analysis. As part of the process we shall also be defining and explaining some of the financial terminology which it is essential for the owner-manager to understand.

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  Managing Electronic Media

  Making, Moving and Marketing Digital Content

  • Joan Van Tassel(Author)
  • 2012(Publication Date)
  • Routledge

    (Publisher)

  This chapter will help students understand how they can participate in the financial planning and management process to strengthen the probabilities that the work they are involved in will be successful. It begins with general concepts and then moves to the key documents and budget items of managerial accounting that underlie the strategies that guide managers’ decisions. Finally, it presents financial statements that companies pre-pare to represent their financial situation to people outside the company. STRUCTURES FOR MANAGING FINANCES In a corporation or large company, the highest ranking financial manager is the chief financial officer or CFO. In a smaller business, the title of the position might be VP or manager of finance and accounting. The other positions within the financial department might be: Credit Manager and Department: Reviews credit history and establishes credit line for buyers of advertising time. Collections Manager and Department: Makes sure company receives the money due to it for the purchase of products or services. Accounts Receivable Department: Prepares and sends out bills for money due to the company. Purchasing Department: Conducts research to find best value proposi-tion for the company’s purchases and issues purchase orders to obtain needed items. Accounts Payable Department: Writes the checks for purchases of prod-ucts, programs, equipment, and services and posts invoices to the general ledger. Payroll Department: Collects, processes, and maintains all documents related to paying employees, as well as taxes and benefits

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  eBook - ePub

  Managing Leisure

  • Byron Grainger-Jones(Author)
  • 2007(Publication Date)
  • Routledge

    (Publisher)

  The document is very searching in its questions, and the questionnaire format makes completion easier. Any organization considering the preparation of a business plan would be advised to approach their own bank to see if similar guidelines are available. The Sports Council also provides some Guidance Notes on the production of business plans, but these are insufficient on their own.

  Financial management Money is a store of value, a measure of liability and a medium of exchange. But money is also transient, and has no fixed abode: it can flow in as income or can flow out as expenditure.

  Money has to be managed, if it is to be used effectively to further the aims and objectives of the organization. And at its most basic, money needs to be ‘brought in’, if the organization is to be able to meet its bills.

  Other reasons for financial management include the following:

  • Private-sector companies are expected to make a profit (shareholders expect fairly immediate returns, more so in the United Kingdom than in some other economies), and financial management makes this possible.

  • Public-sector organizations are expected to manage their budgets properly, to reduce their deficits/increase their income, to break even or make a small profit. • Voluntary-sector organizations have to be careful to ‘balance the books’ if they are to ensure future survival. • Money is a resource which can be transmuted into assets, e.g. by purchasing land, excepting that the asset may turn into a ‘liability’ if, say, the land turns out to be a former land-fill site. • Money is a ‘performance indicator’ which has the advantage of being measurable and relevant.

  • Organizations which handle money, i.e. all organizations, except for those dealing in barter-type systems (LETS for example), have a responsibility to creditors and to government, e.g. for VAT returns, corporation tax, reports to lenders, etc.

  • When assets are converted back into money – a process sometimes described as ‘going liquid’ – through disposal, then the money can be used for other purposes, e.g. to pay debts (thus reducing liabilities) to buy raw materials, to buy finished goods, to build new premises.

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  Managing Finance

  Your guide to getting it right

  • Chartered Management Institute(Author)
  • 2014(Publication Date)
  • Profile Books

    (Publisher)

  Management accounting

  Management accounting is a practice that provides the managers of a business with the information they need to make decisions. It encompasses performance management, strategic management and risk management.

  Management accounting is concerned with using financial information to assist in the internal management of an organisation. It is different from financial accounting, which provides financial reports for various segments of the public and for shareholders. This checklist is intended to give managers an overview of the scope of the work done by management accountants and the contribution it can make to the effective management and performance improvement of a business.

  Action checklist

  1 Understand the scope of management accounting

  Management accounting seeks to address these three business areas:

  • performance management
  • strategic management
  • risk management.

  There is of course, considerable overlap between them. Although management accounting as a discipline and practice is distinct from financial accounting, it may use information produced in a business’s financial accounts and a certain level of integration is required.

  2 Understand the role of management accounting in performance management

  Management accounting seeks to assist the management of performance through a process of reporting on all aspects of business activity. This includes reporting on:

  • sales – volumes sold, product mixes and prices
  • manufacturing efficiency – material usage, material prices, labour efficiency, labour rates and capacity usage
  • administration – overhead expenditure, departmental budgets and cash management.

  The precise scope of a management accountant’s work varies from one organisation to another. In smaller organisations the financial accountant may also be responsible for the production of management reports.

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  Managing Finance, Resources and Stakeholders in Education

  • Lesley Anderson, Ann R J Briggs, Neil Burton(Authors)
  • 2001(Publication Date)
  • SAGE Publications Ltd

    (Publisher)

  Levačić (1993) claims that the budget has four functions that enable it to transform finance into real resources. These functions are:

  1. planning and decision-making;
  2. control;
  3. accountability and stewardship; and
  4. motivation.

  These functions are discussed below.

  Planning and decision-making

  Preparing the budget for the next financial year is a key part of planning. In this respect the budget is forward looking - it is made up of expectations about future revenue and expenditure.

  Reading and

  Please read Derek Glover’s chapter, ‘Financial management and strategic planning’, Chapter 7 in Coleman, M. and Anderson, L. (eds.) Managing Finance and Resources in Education.

  Consider the models of financial management he proposes in relation to your own financial context.

  Our comments

  Ideally, the decision-making process should be strategic to ensure the educational objectives of the organisation are supported by appropriate resources. As Glover suggests, there are several models through which the educational and financial priorities of an organisation can be combined. The following sections examine the potential for this in greater detail. You will probably derive greatest benefit from being able to compare the theoretical perspective, offered by Glover, with your own financial context.

  Control

  The purpose of control is to ensure decisions are implemented. It necessarily restricts the ability of individuals in the organisation to vire funds or spend money as they wish. Budget information for control purposes can be either backward looking, from a record of past transactions, or forward looking, based upon a record of monthly expenditure intentions. The control of the political structures within a school or college through the budgetary processes is discussed below in the section entitled ‘Models of financial decision-making’.

  Accountability and stewardship

  Budget holders present accounts to governing bodies or other relevant groups to demonstrate the money has been used for the purposes intended. This limited form of accountability shows probity but it is more difficult to show the spending has been effective. The British government’s controversial decision to publish ‘league tables’ of various performance indicators represents an attempt to judge educational effectiveness, though these measures of ‘output’ are presented in isolation from the funding information. Within the inspection parameters, Ofsted is required to make judgements concerning ‘value for money’ which might be perceived as an extension of ‘cost-effectiveness analysis’ as discussed above.

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