Financial Manager Roles and External Finance Strategies

Financial Manager Responsibilities

A financial manager oversees an organization's financial operations and reporting. They ensure compliance with legal and regulatory requirements and help management make informed financial decisions.

Key Responsibilities

• Financial Reporting: Prepare financial statements, business activity reports, and forecasts.
• Budgeting: Manage budgets and create revenue and budget projections.
• Financial Analysis: Analyze market trends, financial statements, and business performance.
• Financial Operations: Monitor financial operations such as payroll, invoicing, and cash flow.
• Strategic Planning: Formulate long-term business plans and investment strategies.
• Risk Management: Identify and minimize financial risk.
• Compliance: Ensure adherence to laws and procedures.
• Employee Management: Oversee employees involved in financial reporting and budgeting.
• External Relationships: Develop relationships with auditors, solicitors, bankers, and other organizations.
• Decision-Making: Provide crucial information to senior management to aid decision-making.

Essential Skills

Financial managers require strong analytical, accounting, budgeting, decision-making, and communication skills. Staying updated with technological advancements and accounting software is also crucial.

Career Outlook

Financial managers can work in both private and public sectors, typically holding mid to upper-level positions.

External Sources of Finance

External sources of finance refer to funds a business acquires from outside its own operations. This includes loans from banks, investments from investors, or credit from suppliers. Essentially, it is any money raised from entities outside the company to fund its activities and growth, unlike internal sources like retained earnings.

Key Points on External Finance

• Origin: Funds originate from outside the business, such as banks, venture capitalists, or the public market.
• Need for External Financing: Businesses often utilize external sources when they require significant capital that cannot be generated internally to fund expansion or major projects.
• Types of External Financing:
  • Debt Financing: Loans from banks, debentures, overdrafts.
  • Equity Financing: Selling shares to investors, Initial Public Offerings (IPOs).
  • Other Options: Trade credit, leasing, crowdfunding.