Every business depends first of all on its financial department to keep accurate and up-to-date records of how much money came into the accounts, how much went out, when the transaction occurred and what was paid for. In the modern economy, this department also does a certain degree of risk management, strategic planning, asset and tax management and sometimes even real estate and other investments. The financial department is therefore the most valuable in any economic venture and the manager who can run a successful department ranks among the most inestimable staff members of the company. This article will explain in detail how to manage a financial department successfully.
Division of labour
Any financial department will of necessity have a number of persons employed therein. Each of these employees must have his or responsibilities clearly assigned to them so that there will be no confusion or uncertainty as to who should do what, nor will there be any room for “diffusion of responsibility.” More importantly, since working with monetary figures provides ample temptation for fraudulent misrepresentation, the various tasks involved should be divided among as many individuals as possible. In particular the tasks of cash receipts and cash payments accounting should be handled by different workers. This way, there can be no dishonest bookkeeping unless the workers in the various sub-departments conspire with one another.
As an efficient financial manager you will also have the duty of formulating a clear plan of what investments you want to make and how much profit you are expecting therefrom, as well as knowing how much money you have available with which to work. Having done this, you then have the important job of making sure that the company is making the best possible “investment pitches” and that the analysts who work with you are keeping up-to-date on market trends.
Another important part of being a financial manager is outsourcing some of the work to an accountancy. This can take a good deal of the stress of the job from you and allow you to concentrate on the things that only you can really do for the company. A good outsourcing business will keep you connected in addition to making sure that your records are up to date. They can provide bookkeeping, payroll and CFO services and can even help you to formulate a tax strategy for your business.
Financial management software
There are many good software programs that can aid you in running your financial department, but the best is probably that produced by Microsoft Dynamics GP. It integrates the various types of financial statements (general ledgers, fixed assets, multi-currency and inter-company processing, and so forth) with each other and with other software in the same series, including Financial Reporting, Budgeting & Forecasting and Supply Chain.
Gaining financial expertise can contribute to a company’s short-term success by facilitating cash flow and to its long-term success by lessening interest payments and finance charges. Savvy financing for a small business involves making ongoing choices about borrowing capital, deferring purchases and prioritising expenditures. Just remember that the financial department is at the core of every business. Therefore, take these tips to make it as sound as possible.