The primary responsibilities for a financial team vary depending on the size of the business and how specialized the positions within the financial department are. Understanding the different responsibilities of finance professionals will help you determine whether you want to work as a big fish in a small financial pond, or take the opposite tack with your career as a specialist.
Small Versus Large Business Finance Staff
At a small business, the primary responsibilities for the finance staff include accurate bookkeeping and financial reports for management. Based on the company’s ability to pay for a skilled finance professional versus a basic bookkeeper, the role of the finance department may or may not include being involved in strategic financial management. At larger businesses, the finance staff spends more time on analyzing reports, then helping management make decisions regarding pricing strategies, employee benefits and compensation, debt-service management, and tax planning.
Finance starts with accurate record keeping. From this standpoint, correct bookkeeping is a primary responsibility of every finance staff. This includes recording expenses and revenues, paying bills, billing customers and clients, keeping a general ledger, and performing monthly bank reconciliations.
After accurate record keeping, legal compliance might be the next most important responsibility for a finance staff. This includes making sure that the company meets all legal obligations, such as claiming only legitimate deductions, and paying its sales, payroll and income taxes. At publicly traded companies, the finance team must provide financial reports in compliance with U.S. Securities and Exchange Commission guidelines. Maintaining good financial practices includes conducting audits of all financial reports to ensure accuracy.
Another key responsibility of finance staff is to help create annual budgets. In addition to an annual company budget, finance professionals might be tasked with approving departmental budgets. Accurate budgeting helps companies determine if they need to cut costs, increase prices, drop specific products, secure financing, and better manage working capital. Budgets also help companies determine their costs for overhead, production, administration and sales. These reports help management take steps to keep the company profitable.
Cash Flow Management
At small business, cash flow management is a critical responsibility for the finance department, which might consist of a single bookkeeper or accountant. A small-business owner with strong sales might be misled into thinking his finances are sound when, in actuality, the timing of his customers' payments and his bills cause a financial hole. If bills arrive before customer payments, the business might not be able to pay its obligations. For this reason, cash flow management is an ongoing concern for finance professionals.
Once a business has established accurate bookkeeping practices, a comprehensive master budget, and adequate cash flow, the primary duties of a finance manager include analyzing the performance of the business. This includes performing regular budget variance analyses to see if the business is on track with its projections. Profit-and-loss and cash flow statements help finance managers track the performance of the business and its ability to pay its bills. A balance sheet, which lists the company’s assets and liabilities at any given time, shows the company’s current value. A finance manager who has lower-level staff members handling basic bookkeeping and accounting tasks spends much of the time working with a business owner or management team to help determine pricing, examine spending levels, analyze the affect debt has on the business, create plans to reduce tax liabilities, and decide what to do with excess capital.
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