This article throws light upon the top five functions of a finance manager. The functions are: 1. Financial Forecasting and Planning 2. Acquisition of Funds 3. Investment of Funds 4. Helping in Valuating Decisions 5. Maintain Proper Liquidity.
Finance Manager: Function # 1.
Financial Forecasting and Planning:
A financial manager has to estimate the financial needs of a business. How much money will be required for acquiring various assets? The amount will be needed for purchasing fixed assets and meeting working capital needs. He has to plan the funds needed in the future. How these funds will be acquired and applied is an important function of a finance manager.
Finance Manager: Function # 2.
Acquisition of Funds:
After making financial planning, the next step will be to acquire funds. There are a number of sources available for supplying funds. These sources may be shares, debentures, financial institutions, commercial banks, etc.
The selection of an appropriate source is a delicate task. The choice of a wrong source for funds may create difficulties at a later stage. The pros and cons of various sources should be analysed before making a final decision.
Finance Manager: Function # 3.
Investment of Funds:
The funds should be used in the best possible way. The cost of acquiring them and the returns should be compared. The channels which generate higher returns should be preferred. The technique of capital budgeting may be helpful in selecting a project.
The objective of maximising profits will be achieved only when funds are efficiently used and they do not remain idle at any time. A financial manager has to keep in mind the principles of safety, liquidity and soundness while investing funds.
Finance Manager: Function # 4.
Helping in Valuating Decisions:
A number of mergers and consolidations take place in the present competitive industrial world. A finance manager is supposed to assist management in making valuation etc. For this purpose, he should understand various methods of valuing shares and other assets so that correct values are arrived at.
Finance Manager: Function # 5.
Maintain Proper Liquidity:
Every concern is required to maintain some liquidity for meeting day- to-day needs. Cash is the best source for maintaining liquidity. It is required to purchase raw materials, pay workers, meet other expenses, etc. A finance manager is required to determine the need for liquid assets and then arrange liquid assets in such a way that there is no scarcity of funds.