What is the role of a finance manager in raising funds and allocating funds?

Although the finance managers found limited access to decision-making in the 1950s, the situation has changed drastically nowadays. Now, a finance manager is the person in the key role to raise and allocate funds according to the company's needs.

Raising Funds

The traditional view of financial management has dominated the managers to work within the limits set by the decision-makers in the corporate organization. The finance managers only got attention in the case of promotion, reorganization, expansion, and diversification. The financial managers were called upon to express their knowledge in order to raise the funds.

Note − Modern organizations pay more attention and respect to financial managers than the traditional organizations.

Modern organizations depend wholly on financial managers for raising funds for the firm. He or she is knowledgeable in the process and knows from where to raise the funds as and when necessary. The manager has to keep the day-to-day cash or liquidity of the firm intact so that short-term expenditures can be handled efficiently. But in the case of a shortage of funds, the finance manager must know where to go for raising the funds.

Financial managers are also responsible for raising funds at the lowest possible interest rate, and they know about the trade-off between funds raised and interests applied well enough.

Note − Raising funds is one of the most needed finance functions for any organization seeking growth and profitability in the longer run.

Allocating Funds

Allocating funds in a global market is a key decision manager of big firms need to take usually nowadays. This is completely different from the 1950s when finance was limited to only allocate funds to local or organizational events. Glocalization, intense competition, and government intrusion have affected and changed the funds-allocation process completely.

Nowadays, allocating funds needs have to take many points into consideration. For example, the enhancement of managerial skills and the use of optimum resources have found a place in modern organizations.This helps the managers decide the best amount of money to be allocated in various functions of the organization.

In modern organizations, the financial manager has discussions with the managers of other departments for an efficient funds allocation process.Funds allocation is one of the most important skills a financial manager has to be an expert in nowadays.

Note − Apart from having skills and knowledge, the modern financial manager must have access to analytical and business data that assists him to take an informed decision in fund allocation.