Thursday, 22 July 2021

Roles and responsibilities of a financial manager in maintaining records of business expenses

 In any particular organization, budgeting plays a very important role to run the business properly. It helps to plan the expense on a particular area that ultimately helps to execute the plans in the right direction. Because everything in the organization requires money, it could be human resources, raw materials, advertising, PR, etc. In all these areas, the organization needs to invest, and to this, they need to create the list in which all the requirements and its price is written. After setting the budget and list of expenses the most important thing is that to utilize the money most effectively and efficiently. This is very important because, it ensures the profitability, goodwill, growth, and execution of all the plans masterfully. To accomplish this, the financial manager came into the force, therefore they are very important.

 

Who are financial managers?

 

Financial managers are the very important body of any organization, they are accountable for the financial condition of an organization. They have to create financial reports, lists, direct investment activities, as well as developing strategies and plans to achieve a long-term financial goal, aimed by the organization.

 

What are the objectives of the financial managers?

 

The main objective of the financial manager is to increase the profit of the organization, in both the short term as well as long term. Saving money to making proper cash flow, preparing the capital structure, running the business more appropriately, creating reserves, etc. are some of the important objectives of the financial manager that helps in the survival, ultimately lead to the growth of the company.

 

Further, we are going to talk about the responsibility of a financial manager in maintaining records of business expenses.

 

Their responsibilities are as follows:-

 

  1. Estimate of required capital:- Estimating the amount is one of the most important responsibilities of a financial manager. The need of the capital required in a business firm is to purchase the assets, conduct meetings, expansion of the organization, add new instruments or pieces of equipment for modernization.
  2. To get the funds:- Collecting the fund is a very much important aspect of any business organizations growth, and the financial manager plays a vital role in achieving this. They decide the source from which management could raise the funds, some of the important sources of raising funds are banks, shareholders, debenture-holders, financial institutions, public deposits, etc.
  3. compose capital structure:- Taking a decision related to the mode and proportion of numerous sources of funds is a much necessary step, to do this financial manager came into the duty. They are the person who determines equity and debt, short-term and long-term debt ratio properly.
  4. Funds procurement:- Business organizations need to procure the funds from various sources, to do this a big discussion is made for the negotiation purpose with creditors and fund providers. This is made on the basis of the cost of raising the funds, and some other factors like current market conditions, investors choice, government policy, etc. 
  5. Proper utilization of funds:- After the procurement of the funds, financial managers' next duty is to invest them in various assets, properly. It should be done in a way that could give maximum return to the organization. 
  6. Surplus Disposal:- Disposal of profit or surplus is one of the important functions of the financial manager in the business house. They are responsible for deciding against retaining and distributing profit among the shareholders. Other people could determine it appropriately, financial managers have the skill and knowledge by which they make the decision.

 

By following some factors like company’s 

 

  1. performance, market trend, self-financing, future requirements and programmes they take the decision.
  2. Managing cash flow:- Managing cash is one of the basic roles of the financial manager, they keep their eyes on the assets and cash flow to ensure no shortage or surplus of cash will happen in the organization. To buy any material, wages management, and organizing meetings company needs funds, so they make a list in which the stakeholders will get profit, and along with it, the companys budget would also maintain equilibrium.
  3. Finance control:- The financial managers evaluate the performance of the company, ROI or Return On Investment is one such way of evaluation. Some other ways of controlling and evaluation on the finance are cost control, budgetary control, ratio analysis, break-even analysis 
  4. Analyze expense:- The financial managers make the analysis of their expense on the various areas of the business, finds what are the outcome from that particular expenditure. How can we save our cost from that area, is that investment-worthy for the organization, or did the company got the loss, how could the company save the investment, etc By analyzing over these areas they make the proper application of investment, and solve some loophole which could hurt the company financially?

 

What are the qualities that we must look for in a financial manager?

 

As we know that the financial managers are very much important for a business and they are like the backbone, so we have given some important qualities that every financial manager must have in themselves:

 

These qualities are as following:-

  • Good communication skill
  • Punctuality
  • Critical thinker
  • Problem-solving skill
  • Interpersonal skill
  • Must have leadership skill
  • Teamwork and collaboration skills
  • Work ethics
  • Project management skill
  • Must adapt in unfavourable conditions

 

 

 

 

The conclusion:- 

 

After going through all the articles we could conclude that financial managers are very much important in the growth of any business house. They take important steps in managing the finance of the business, from getting funds to utilize the funds, from estimating the required capital to finance control every decision related to expense in a business house is taken by finance managers. Their responsibilities are very diverse, and to achieve long-term as well as short-term business goals business house needs to hire a skilled financial manager.

 

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