The activities expected from a finance department cover a wide range from basic bookkeeping to providing information to assisting managers in making strategic decisions.
The finance department is also responsible for management of the organization’s cashflow and ensuring there are enough funds available to meet the day-to-day payments. This area also encompasses the credit and collections policies for the company’s customers, to ensure the organization is paid on time, and that there is a payment policy for the company’s suppliers.
Where there are cash needs beyond the day to day working capital, the finance department is responsible for advising and sourcing longer term financing. Financing may be obtained though bank or private lender debt or, in applicable firms, share issues to private investors.
The finance department can now start to contribute to the management and improvement of the operations by measuring and reporting regularly on key numbers crucial to the success of the organization. Management accounting information is information that managers can use to monitor the operations and decide where further attention may be required. It will likely include some non-financial information and should be communicated to managers in a way that is easy to understand.
Finally, the finance department should be called upon to provide information to assist managers in making key strategic decisions, such as which markets or projects to pursue or the payback periods for large capital purchases. The finance department can often contribute an objective perspective based on special financial assessment techniques.
Controlling expenditures and obligations (including operating expenses, debt, payroll) receipting and depositing all revenues. managing the investment of all monies.Continue Reading