What are the functions of finance manager?

Managing finance is one of the most crucial and important parts of business organisation, which involves the permanent and continuous process of the business concern. This is the interrelated functions that deals with personal function, marketing function, production function and research and developments activities of the business.

Finance manager is one of the important player in the field of finance. He must have sound knowledge on accounting, finance, economics and management. The position of finance manager is highly critical and should have analytical knowledge to solve various problems relating to finance.

The major functions of finance manager are:

1.Forecasting  Financial  Requirements:

Forecasting financial requirement is one of the major and sensitive issue for finance manager. Shortage forecasting may lead to hamper production and other day to day activities of the business due to shortage of fund arrangement, again excessive forecasting may increase excessive finance cost. Hence, finance manager may be required to forecast regarding the requirement of working capital, required to acquire fixed assets etc.

2. Acquiring  Necessary  Capital:

After forecasting financial requirements, finance manager needs to concentrate how the finance is mobilized and where it will be available. Finance manager will make a analytical statement about finance sources such as internal fund and external fund to determine which would be more cost effective.

3. Investment Decision:

The finance manager must carefully select the best investment alternatives and consider whether this decision may produce reasonable and target return to the company. He must have experience in the field of capital budgeting techniques to determine the effective utilization of investment. The finance manager need to concentrate on safety, liquidity and profitability principles at the time of investment.

4. Cash  Management:

Proper cash management may reduce to short liquidity problem of the business concern. Finance manager needs to give proper concentration on cash management to smooth the operation of the business.

5.Interrelation with  Other  Departments:

Finance  manager  deals  with  various  functional departments such  as marketing, production, personel,  system, research, development, etc. Finance  manager  should have  sound  knowledge  not  only  in  finance  related  area  but  also well  versed  in other   areas.  He  must  maintain  a  good  relationship    with   all  the  functional departments of the business organization.

6. Profit planning:

Finance manager should have plan on the targeted profit of the company. In this respect finance manager would take various strategy to optimize the profit of the business. Product pricing policy, capital structure mix, mechanism of demand and supply policy, a healthy mix of variable and fixed factors of productions may lead to boost up of the profitability of the business.

7. Knowledge on capital market:

Capital market is one of the important area of fund management. Shares of company are continuously selling and purchasing in capital markets. Hence a clear understanding on capital market is mandatory requirement for the finance manager. When the shares of a company are traded in stock market, there is a huge risk that may reduce the share price of the company. Therefore finance manager need to calculate the risk involved in the trading of shares.