Over a decade, the roles of the financial managers have been limited to making a profit or add value to the investment of shareholders. However, this goal has been considered to be vague and require a precise definition to include the use of general management principles of enterprise financial resources (Lambert and Sponem, 2012). Therefore, the financial manager is responsible for handling all the financial functions which include;
Raising of Funds
The financial manager is required to formulate ways in which the organization will have sufficient cash and liquidity. In this case, the manager may decide to raise funds either through equity or debt and maintain the balances between the sources of funds.
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Allocation of Funds
After the responsibility of raising funds, the financial manager is required to allocate funds to various avenues of the organization. Allocation of funds should be done in a manner that is optimal while considering the size of the business and growth potential. In funds allocations roles, having a good product mix and proper allocation of funds affect the business activities either directly or indirectly.
Profit Planning
Making profit is the core goal of every business functions to survival and growth. Thus, profit planning includes proper utilization of profit generated by the business (Lambert and Sponem, 2012). Profit generation is as a result of various factors such as economic status, competition, and cost. In a nut cell, the profit depends on the mix of factors of production.
Understanding Capital Markets
Financial manager provides information on how shares are traded in the stock market. In this sense, the manager should highlight the risk involved in the capital market and means to reduce risk impact to the operation of the firm.
Exerting Controls
For an effective utilization of resources, financial manager should put in place internal controls. In this case, internal controls ensure that financial transactions are not interfered with to undermine accountability and transparency.
References
Lambert, C., & Sponem, S. (2012). Roles, authority and involvement of the management accounting function: a multiple case-study perspective. European Accounting Review , 21 (3), 565-589.
