Managing Finance

Role and Responsibilities of a

FINANCE MANAGER

How much monetary resources are to be arranged for which are all projects and how and when to arrange it, are often decided by a finance manager. Allocation of the available or acquired money in profitable business activities is the responsibility of a finance manager. So in any industry the FM plays an important role.

A FM must be having a clear understanding about the financial aspirations of his organization and the manners through which it’s going to accomplish those goals. The financial environment is often susceptible to even the minute changes in the society. So information about each socially relevant incident and its possible repercussions in the financial scenario becomes really important. No business organization thus can play effectively without the services of a professional finance manager.

In most organizations important Financial Decisions are part of the corporate decisions. The Financial Manager may form a part of the body which arrives at these decisions. He is ascribed duties of submitting a plan as to how to arrange funds, how much and through what means, to deploy on what projects etc. by the top management. FM will have to be a part of the three main aspects of financial decision making viz: Investment Decisions, Financing Decisions and Dividend Policy Decisions.

We can discuss some of the important terminologies of financial management now.

Decisions concerning the financial matters of a business organization are called FINANCIAL DECISIONS.

The total activity of deciding the magnitude of assets to be held by a firm, the proportional constitution of these assets, and the possible risks involved as perceived by an investor etc is termed as INVESTMENT DECISIONS.

Investment Decisions are of two types: LONG TERM INVESTMENT DECISIONS and SHOT TERM INVESTMENT DECISIONS.

Deciding on the size of the capital to be collected and the ways of deploying it on various projects are examples of long term financial decisions.

Short term financial decisions include allocation of funds on short term investments.

The Decisions arrived upon by a FM from time to time on the ideal financial mix to maximize the returns from a business venture is called FINANCING DECISIONS.

How to raise capital required, when, and through what means etc are financing decisions.

Disbursement decisions of the profits or business earnings to all those who are party to it is DIVIDEND POLICY DECISIONS.

It’s concerned with the sharing of profits to all concerned in its due proportions. It should be a balanced decision taking into consideration the aspirations of the investors, company’s hopes on gain and growth, its liquidity position, stability and debt & repayment conditions.