For achieving success in cutthroat markets,efficient organizations streamline their finance functions in an organized manner. Since the financial objectives reflect in various reports that are handed over to stakeholders, a finance manager must be able to put forward financial information for the laymen as well.
Companies need to organize their finance functions for a variety of other reasons as well. Some of these reasons include the profitability of the company. increasing shareholders' value and maximizing wealth. Whatever the reason of organizations, it is the duty of the finance manager to keep the process streamlined.
Note − Companies organize the finance functions for several reasons.
For streamlining and smoother operations, modern companies keep an individual with vast knowledge of his or her role apart from having knowledge of finance as the responsible manager for the company. This person conveys all related information to the top brass as and when the need arises. In most companies, the designation of this role is called Chief Financial Officer (CFO).
The CFO is not only responsible for reporting the status of the company to the owners but he/she must also be able to advise paths for the company to follow for ultimate success. In most organizations, the CFO is part of the Board of Directors who work under a chairperson or Chief Managing Director (CMD) who is the legal owner of the business.
Note − Most modern businesses appoint a CFO to look after the financial functions of an organization.
The director of finance is backed by Executives directors of finance (EDF) and general manager of finance (GMF). The EDF is responsible for budgeting and costs, funding, books of accounts, cash, and financial services. The GMF looks after internal audits and tax-related issues.
The designated persons mentioned above may further be supported by more employees, such as Chartered Accountants (CA), and Charter financial analysts (CFA). The ultimate aim of the finance team is to keep the financial function updated and let the CMD have an idea of the status of the team and its initiatives.
The recruitment of a CFO and handing over financial duties to him is important for numerous reasons. The first is, the company needs a good financial team for survival, and a person directly involved and having knowledge can be profitable. Second is, the companies can never become insolvent and hence a special manager can make sure the company remains solvent all the time. The top manager being knowledgeable can keep control of financial functions. So, the appointment of the financial team is key to the company's success.
Note − Appointing financial managers help the company remain intact and grow gradually if the financial team is skilled and knowledgeable.