Financialtreat – will explain about How to Choose a Financial Manager for Your Company which you will get in the following article. let’s look at this article carefully!
A financial manager is an individual who manages financial management, makes strategies, makes decisions, and applies them according to the company’s goals. The purpose of the financial manager is to lead the finance division and make reports directly on the director of the company, and to find a financial manager is also very easy.
How to Choose a Financial Manager for Your Company
Role of The Financial Manager
The financial activity of an enterprise is one of the most important and complex activities of an enterprise. Therefore, to carry out this activity, a financial manager performs all the necessary financial activities.
A financial manager is a person who takes care of all the important financial functions of an organization. The person in charge must maintain a distant view to ensure that the funds are used in the most efficient manner.
His actions directly affect the profitability, growth and goodwill of the company. Here are the main functions of the Financial Manager:
Fundraiser
To fulfill business obligations, it is important to have sufficient cash and liquidity. The company can raise funds through equity and debt. It is the responsibility of the financial manager to determine the ratio between debt and equity. It is important to maintain a good balance between equity and debt.
Fund Allocation
After the funds are raised through different channels, the next important function is to allocate funds. Such funds should be allocated in such a way that they can be used optimally.
Profit Planning
Earnings are one of the main functions of any business organization. Profit earnings are important for the survival and survival of any organization. Profit planning refers to the proper use of the profit generated by the enterprise.
Profits arise due to many factors such as price, industry competition, the state of the economy, the mechanism of demand and supply, costs and outputs. A healthy mixture of variables and factors of production can still increase the profitability of the enterprise.
Fixed costs arise by using fixed production factors such as land and machinery. To maintain the tandem, it is important to constantly assess the depreciation costs of fixed production costs.
Opportunity costs must be calculated to replace those factors of production that have been damaged and damaged. If this is not recorded then these fixed costs can lead to huge profit fluctuations.
Understanding the Capital Market
Shares of the company are traded on the stock exchange and there are continuous sales and purchases of securities. Therefore a clear understanding of the capital market is an important function of a financial manager.
When securities are traded on the stock market, it involves a large amount of risk. Therefore, a financial manager understands and calculates the risks involved in trading these stocks and debt securities.
This depends on the wisdom of the financial manager on how to distribute profits. Many investors do not like companies distributing profits among shareholders as dividends rather than investing in the business itself to boost growth. The practice of a financial manager has a direct impact on operations in the capital markets.
The importance of a Financial Manager in a company.
Why is a financial manager important in a company? Because the financial manager will help the company’s financial management to be better and safer. And why is Financial Management in a Business Important?
There are a myriad of benefits for you if you implement good financial management. Here are some of them:
Knowing the Capital That Has Been Issued
By practicing good financial management, it will allow you to know exactly the amount of funds spent on the purchase of assets. Assets here mean capital that can later generate income.
In issuing funds for capital expenditures, you need to balance the amount of income that will later be generated by the capital. It needs to be done so that bankruptcy does not occur.
If you can manage your expenses properly, your financial flow will become healthier so you don’t need to make loans to other parties. You can also focus on assets that can provide more income for the company.
Can Manage Cash
By having good financial management, cash flow can also be managed more regularly. You will not have a headache thinking about whether you have funds to pay bills such as electricity, water, telephone, employee salaries, to insurance.
One useful tip you can do is to shorten the amount of time you give customers to pay or negotiate a due date to the vendor.
You need to be disciplined in doing financial management. The reason is, if you are unsuccessful in managing cash flow effectively, you may default and the company’s operations may be disrupted.
Lowering Costs
One of the main tasks of having financial management is to keep costs as low as possible. There are several things you can do, such as asking vendors to lower prices because they have been subscribed for a long time, reducing electricity and water use, or buying a massive inventory of goods.
If you can’t manage your expenses properly, another thing you can do is to be able to significantly boost sales figures so that expenses can be patched up.
Tax Planning
Another thing that can be done by having financial management is tax planning. With financial management, you can estimate the estimated amount of tax that must be spent. You can also rest assured because you already have your own post, namely for taxes, so you don’t have to worry about being late paying taxes.
As is known, late payment of taxes will be subject to fines so it is necessary to allocate additional funds to pay the fines. Because you already have financial management, your company’s tax planning will run smoothly.
Scope of Business Financial Management
There are basically two common ways to understand the concept of financial management, namely the conventional approach and the modern approach. The conventional approach means understanding the principle of financial management as a system that revolves only for money management.
Meanwhile, the modern approach considers financial management as a broader system, which influences three strategic decisions, namely investment, dividends, and of course finance. These three aspects of the modern approach are the scope for financial management. Here’s a detailed explanation:
Financial Decisions
Financial decisions mean having a relationship with the management and improvement of finances sourced from various types of capital. The decision has an effect on how companies reach for capital, then how they spend it.
In financial decisions, there are two periods, namely long-term (capital structure) and short-term (working capital). The long term has to do with the funds used for business operations. Meanwhile, working capital is related to the availability of funds, capital structures related to sources of capital (internal and external).
Investment Decisions
Investment decisions have to do with how a company uses existing assets to achieve targets. Almost similar to the aspect of financial decisions, investment decisions have types, namely long-term and short-term.
Long-term is related to fixed assets, while short-term decisions have a direct influence on the company’s liquidity through current assets.
Dividend Decision
The scope of dividend decisions includes the distribution of profits to each of the company’s shareholders. In addition, dividend decisions also have to do with the proportion of funds willing to be stored for business expansion needs or company diversification.
Criteria for Choosing a Financial Manager
Here are some criteria to know when looking for a financial manager. The financial manager must have at least the following mentioned traits
1. Communication
A financial and accounting manager needs smart and clear communication skills, both in terms of the ability to speak, write, to explain data and information or make recommendations.
2. Coordination
Financial and accounting managers need coordination skills to manage and organize multiple employees and work at the same time.
3. Leadership
Financial and accounting managers act as leaders in their departments, coordinate with executives to discuss the goals of the company, and make plans for all employees in the finance and accounting divisions to fulfill those goals. In carrying out the work, this position requires strong leadership skills.
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4. Details
Responsible for controlling and monitoring company finances, this profession requires the ability to do a job in detail because it must pay attention to financial data and correct errors in financial reporting or budgeting of company funds.
Already know why financial managers are so important, especially for companies? Hope this information is helpful!