The financial management department of any firm is handled by a financial manager. The finance manager, has to manage funds in such a way so as to make their optimum utilization and to ensure their procurement in a way that the   risk, cost and control are properly balanced under a given situation. A financial manger is a person who takes care of all the important financial functions of an organization. Thus, the most important ones are related to money. Some of the major functions of a financial manager are as follows: 1. 2. They produce financial reports, direct investment activities, and develop strategies and plans for the long-term financial goals of their organization. Before the actual procurement of funds, the finance manager has to decide the sources from which the funds are to be raised. An administration has to take countless decisions in the lifetime of the company. Image Guidelines 5. Functions of financial management or manager. Apart from these, there are three primary functions of the middle-level management in the organization briefed below: To carry out the plans of the organization according to policies and directives laid down by the top-level management. Estimating the Amount of Capital Required 2. Accountant is not concerned with management of funds that is a specialized task and in modern times a complex one. 3 Modern Financial Management Techniques that Will Change Your Business Financial Intermediaries - Meaning, Role and Its Importance Role of the Finance Function in the Financial Management … The procurement of funds is dependent not only upon cost of raising funds but also on other factors like general market conditions, choice of investors, government policy, etc. The goal of the financial manager-The overriding goal is to maximize the wealth of the stockholders. The management can raise finance from various sources like equity shareholders, preference shareholders, debenture- holders, banks and other financial institutions, public deposits, etc. Before publishing your articles on this site, please read the following pages: 1. At the very basic, they will a comprehensive asset register. In order to meet the obligation of the business it is important to have enough cash and liquidity. The reason is easy to find out. He is to record various happenings in monetary terms to ensure that assets, liabilities, incomes and expenses are properly grouped, classified and disclosed in the financial statements. The financial planning aspect of the job includes setting goals for achieving specific revenues, profit margins and gross profits. Finance manager compares the risk with the cost involved and prefers securities with moderate risk factor. Evaluation of financial performance is also an important function of financial manager. The funds procured by the financial manager are to be prudently invested in various assets so as to maximise the return on investment: While taking investment decisions, management should be guided by three important principles, viz., safety, profitability, and liquidity. Determining Capital Structure 3. The financial manager is required to look into the financial implications of any decision in the firm. 18. Admin Manager: Where finance manager and assistant have specific duties, the admin manager has three-fold responsibilities: Finance aspects, HR and administration and logistics.The Admin has to take overview and control of the hiring, inventories, stocks, and all other non specific activities. Financial management is closely related to accounting. For this, financial manager has to determine the proper mix of equity and debt and short-term and long-term debt ratio. The financial manager has three main tasks:-Make investment decisions-Make financing decisions-Manage cash flow from operating activities. A finance manager of a large org Risk: More risk is associated with borrowed fund as compared to owner’s fund securities. The cost of raising finance from various sources is different and finance managers always prefer the source with minimum cost. Selec­tion of assets in … It means applying general management principles to financial resources of the enterprise. Privacy Policy 8. Financial management is an essential action for any organization to manage financial resources. It is the basic function of management. Financial Forecasting and Planning: A financial manager has to estimate the financial needs of a … Business firms require capital for: (ii) meeting working capital requirements, and. Financial Manager is the executive who manages the financial matters of a business. Report a Violation. Dividend Decision: The third major financial decision relates to the disbursement of profits back to … … It is an exercise in problem solving & decision making… The overall measure of evaluation is Return on Investment (ROI). The finance manager or controller has a task entirely different from that of an accountant, he is to manage funds. There are four main financial decisions- Capital Budgeting or Long term Investment decision (Application of funds), Capital Structure or Financing decision (Procurement of funds), Dividend decision (Distribution of funds) and Working Capital Management Decision in order to accomplish goal of the firm viz., to maximize shareholder’s (owner’s) wealth. Procurement of Funds 5. Financial Management means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise. Finance manager skills are those that help individuals in this role oversee all aspects of a company's financial transactions, including budget analysis and calculation of return on investment (ROI) as well as purchasing and staffing decisions. (iii) modernisation and expansion of business. Cash Flow Position: Disclaimer 9. Estimating the Amount of Capital Required: This is the foremost function of the financial manager. A plan is a future course of actions. The Finance function has been classified into three: Long-Term Finance – This includes finance of investment 3 years or more. The financial manager makes estimates of funds required for both short-term and long-term. The responsibilities / key functions of a financial manager are as follows: Planning, Organizing, Controlling, Financial Planning, Financial Forecasting, Financial Engineering etc. a).What are the three major functions of the financial manager?How are they related? According to KOONTZ, Planning is deciding in advance - what to do, when to do & how to do. Content Filtrations 6. But the accountant’s main function is to collect and present financial data. Thus all decisions involve management of funds under the purview of the finance manager.A large number of decisions involve substantial or material changes in value of funds … Sources to raise funds. Lease Finance: Type, Advantage and Disadvantage of Leasing. It also requires setting targets for overhead and production expense levels and debt-service management. The finance managers must know how much cash will be ‘tied up’ in various kinds of non-cash (or non-liquid) assets. The financial manager must lay emphasis on financial planning as well. Site, please read the following pages: 1 associated with borrowed fund compared... 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