What is a Financial Manager?

A financial manager is an executive assistant who exerts his or her attention, education, and resources towards sustaining the financial strength of an organization.

By endeavoring to increase profits and revenues, a financial manager is essentially the supervisor of company assets — including but not limited to employee and corporation shares and ownership, stocks and other investment ventures, credit ratings, debt collections, and existing assets such as properties, franchises, and affiliates. They are also managers of the risk and gains associated with corporate insurance policies.

What Does a Financial Manager Do?

A financial manager performs a wide variety of tasks to help senior management officials choose policies, make investments, and spend money in ways that will benefit and grow the company. In addition to supervising financial activity and advising administrators, financial managers may also oversee the budgeting and accounting departments’ staff members. However, the everyday goals and tasks may vary from manager to manager and depend upon their specific title and specialty within financial management.

Developing Critical Financial Documents

These financial managers are responsible for arranging balance and budget sheets, income statements, and summarizing a company’s state of financial affairs. It may also be a financial manager’s duty to ensure that all federal and state legal requirements are satisfied and prepare audits and other reports as ordered by the IRS and/or other governmental departments.

Credit Management

Supervising policies for the issuance of credits, and overseeing its processes for payments, interest, and collections from accounts overdue, financial managers help determine the standards and conditions by which a company rates credit scores and establishes debt and credit ceilings.

Risk & Insurance Management

Financial managers analyze costs, estimate expenses, and predict future fluctuations in currencies and exchange rates. Financial managers also determine where and when funds should be invested and the likelihood that investments will lead to either significant loss or profit. They also help companies avoid financial damages associated with worker compensation, disability payments, and lawsuits resulting from poor insurance-policy judgement.

Treasury  Management

Financial managers known as treasurers and/or officers strategize expense budgets, identify solutions for minimizing production and labor costs, oversee mergers and financial acquisitions, implement systems intended to source capital, and devise tactics for security, longevity, and corporate expansion. Managing incoming and outgoing cash activities and assets, they also project if the company will yield a surplus in cash that can be used to invest, or a deficit in cash that will require a loan.

Technology

Each advancement and change in technology alters the job duties of financial managers. For example, as most financial reports have been automated and streamlined through computer software, financial managers can now devote more of their schedule to evaluating this data and identifying new ways of shrinking expenses and boosting returns. They can also use this software to create simulations of financial situations and their outcomes and propose solutions to senior administrators.

Shareholder Value

Financial managers are largely responsible for identifying strategies that can augment shareholder value through company growth, raising returns on investment (ROI), increasing profits and market shares, and/or refining overall performance and manufacturing productivity.

The two most common ways financial managers increase shareholder value is by raising the cost to customers for a company’s services or products or increasing production output while lowering cost to customers in order to sell more products in less time.

What is the Difference Between an Accountant and a Financial Manager?

While accountants and financial managers share nearly identical educational backgrounds, credentials, and certification, the primary difference between an accountant and financial manager is experience. As financial managers are responsible for big-picture strategies, they are required to have far more experience than an entry-level accountant.

Accountants, on the other hand, perform the calculations of day-to-day financial matters such as reporting daily expenses and transactions, maintaining tax records, and preparing various financial statements. Working under the supervision of financial managers, an accountant can strive to advance his or her career by one day becoming a financial manager.

What are the Working Conditions of a Financial Manager?

The working conditions and environment of a financial manager are typically described as cozy, upscale, and comfortable. Financial managers are employed by a diverse variety of industries such as banks, large corporations and manufacturers, computer software/tech companies, and insurance agencies.

Because they are advisors to senior management and supervisors over accounting employees and other financial departments, financial managers enjoy comforts similar to those enjoyed by higher-up corporate executives. These amenities usually include a personal office, valet and/or reserved parking, and access to the latest in cutting edge computers, software, and technology.

However, as these types of perks do not come without serious responsibility, financial managers frequently work upwards of 60 hours per week.

Why are Financial Managers Important?

Financial managers are important because they are essential to a company’s survival. Without financial managers, organizations would be far too susceptible to the unlimited sources of financial damage and distress; such as, overspending, under producing, inconsistent earnings, and bankruptcy as a result of accumulating and unbeatable debt.

Furthermore, competition amongst businesses would be unpredictable, and the reasons determining why some companies thrive and others do not would be almost entirely unknown. As financial management holds the key to prosperity, financial managers are the livelihood of business.

What Do You Learn in a Financial Management Degree Program?

In a financial management degree program, students learn about financial institutions and markets, insurance and real estate industries, and how to speak the complex financial language of business. The following is a detailed list of specific subjects and concepts commonly taught in financial degree programs. It should be noted, however, that this list is not comprehensive nor is it complete.

  • Financial Planning – Students learn the basic principles of financial planning such as value creation, effective growth strategies, performance standards and metrics, and strategic cost/benefit analysis and management.
  • Behavioral Finance – Students learn various theories for the processes of decision-making based on risk and reward and the psychological reasons behind the most common yet detrimental of financial mistakes.
  • Investment Management – Students learn how to make wise investments by studying real estate, portfolio management, mutual funds, derivative securities, instruments of equity, tax planning, and analysis of transactions and risk.
  • Corporate Finance – In addition to learning the function of financial managers in corporations, students are also taught budget balancing techniques, the various sources and methods for raising capital, and how to accurately project future expenses and revenue.
  • International Financial Management – Students learn about exchange rates, global financial regulations, international terms of investment, foreign company acquisitions, the political and financial risks associated with certain countries, and the international rates of taxation.
  • Financial Institutions – Students learn about financial institutions and the securities they create. They also learn how to purchase and trade those different types of securities, the various processes for pricing and trading stocks and bonds, and how to navigate financial regulations and deregulations.
  • Interpersonal Concepts – As future supervisors of staff, financial management students learn about quantitative models and techniques to support senior administrators, organization strategies, employee management and communication, and how to prepare and give engaging presentations to motivate workers.
  • Macroeconomics – Students learn about various financial theories such as the general equilibrium model, Keynesian and post-Keynesian models, national income accounting, public sector spending, and the principles of consumption and savings.
  • Microeconomic – Students learn how to perform statistical analyses for projecting supply and demand, fluctuations in prices and resources, and how to make well-informed decisions based on these data.

What are the Requirements to Become a Financial Manager? 

Educational Requirements

In order to become a financial manager, you must first earn a bachelor’s degree in either business administration, accounting, or finance. This degree typically takes four years to earn, but some universities offer intense fast-track programs than can be completed in three years.

However, as financial managers usually start off as lower-level accountants, it is advised that students take an internship (preferably one each year of their undergraduate studies) in order to gain early hands-on experience in the field.

Although it is not required, the majority of employers will not hire a financial manager if he or she has not pursued advanced education such as a master’s degree in finance, economics, business administration, or at least completed one or more advanced educational courses in corporate financial management, modeling, or international financial markets.

Work Experience

Nevertheless, there is no better educational practice in regards to the world of financial management than years of real professional experience. Most employers will not even consider hiring an applicant if he or she does not have a minimum of five years’ experience in a related financial field. Starting your career as an accountant or financial analyst and then continuing to build your professional resume is essential if planning on career advancement and becoming a financial manager. 

Certifications

Companies look for applicants whose resumes suggest they are highly determined and driven individuals, and one of the best ways to appear this way is to voluntarily earn supplementary certifications. While there are numerous types of certifications, perhaps the most recognized is the Chartered Financial Analyst or CFA certification. CFA credentials qualify candidates to work for investor groups, insurance agencies, banks, mutual funds, and finance consultancy firms.

What is an Online Financial Management Degree?

An online financial management degree is a four-year bachelor’s degree comprised of 120 to 128 credits that may be earned online. Although it is equally as demanding and difficult as undergraduate programs that require students to attend classes at an on-site, physical location, students earning their financial management degree online enjoy the flexibility and convenience of studying at home that only a web-based program can offer.

Perfect for those who work full-time, have children, and/or other familial responsibilities, online financial management degrees are also highly favorable because courses are more finance-specific than bachelor’s degrees in accounting or business administration.

In addition to covering accounting and business organization principles, students earning an online degree also learn the fundamentals of economics, financial analysis, banking laws and ethics, rules for investments and trading, and risk assessment.

What Tools are Used by a Financial Manager?

From small businesses to the world’s largest corporations, financial management has been made easier and the results of its calculations more accurate through technological advancement. While this list should not be considered complete, as there may be many more tools that financial managers use, the following six are an essential start.

Budgeting Software

One of the most important responsibilities of a financial manager is not only to devise a strict and yet sensible budget, but to also monitor that budget and ensure it is adhered to each and every quarter.

Payroll Management System

Previously wasting hours and even days of valuable time and energy, specialized computers and software tools now streamline these activities such as balancing payroll accounts, processing payroll checks and employee direct deposit, and even auto-paying government payroll taxes. 

Inventory Management

Companies who produce and sell tangible goods must keep accurate inventories of their products and resources. Inventory management tools are used to create and maintain sales reports, streamline warehouse activities and shipping, and warn production teams if and when inventories become low.

Accelerate Receivables Systems

Financial managers use new and improved electronic receivables systems to refine and accelerate the entire collections process, access balances, and quickly pinpoint dangerous deficits in cash flow.

Online Intelligence Systems

Monitoring numerous transactions platforms and instantly analyzing and updating Customer Relationship Management data reports (CRM), online intelligence tools allow financial managers to spend their day identifying effective financial strategies rather than serially poring over reports.

Expense Tracking Tools

Financial managers use instant expense tracking tools to help balance corporate budgets and identify wastefulness and overspending.

What Does It Take to Be a Financial Manager?

In addition to fulfilling educational requirements and having at least five years of professional experience, financial managers must possess certain skills and personality traits to excel at their careers.

  • Tech Skills –All finance professionals are proficient users of the information technology and platforms of the trade. What sets a financial manager apart is their ability to speak Structured Query Language (SQL), modify existing financial tools, and even build their own.
  • Innovative Thinking – Companies prefer applicants who are driven towards innovation. Financial managers should possess the capacity to innovate better and more effective ways for collecting, maintaining, and analyzing data.
  • Self-Management – In order to effectively manage others, financial managers must first be able to manage themselves, devise personal high standards, and evaluate their own work without upper supervision.
  • Professionalism – As the experts who corporations trust to oversee their most important processes and precious assets, financial managers must conduct themselves with a formal attitude and consistent professionalism.
  • Problem-Solving Skills – While maintaining an air of trustworthiness and authoritative composure, financial managers must be able to devise ideal, model solutions to some of the most problematic and multifaceted financial catches and predicaments.
  • Interpersonal Skills – As they are often responsible for establishing rapport with corporate clients, financial managers must possess the necessary interpersonal skills for cultivating strong and reliable professional relationships.
  • Quick Feet –In the fast-paced world of investments, every minute counts. Thus, regarding data analyses and solving complex problems, financial managers must be quick on their feet and able to perform these tasks in rapid time.
  • Analytical Skills – Having the ability to analyze and deduce accurate suppositions from large quantities of data is not a skill with which people are born. Before assuming a position as financial manager, applicants should pursue professional experiences that cultivate analytical and lateral thinking.
  • Strong Leadership – As the everyday tasks of financial and accounting department employees can be tedious and monotonous, the financial managers who direct and supervise them must possess strong motivational and leadership skills.

What are the Benefits of Being a Financial Manager?

Like all careers, there are pros and cons to being a financial manager. However, available research and polling reports indicate that most financial managers insist that the benefits of their chosen career far outweigh the costs.

  • High Earning Potential – As the majority of financial managers see their salaries reach well over six-figures, their income and overall earning potential is typically much higher than most finance professionals.
  • Diversity – Contrary to popular belief, the financial sector offers an impressive and diverse array of specialized concentrations for those who prefer to explore their professional options, spread their resume, and expand their credentials.
  • Upward Mobility – Although a career in finance might typically begin as an accountant at a tedious desk job, the potential for growth and upward mobility into high-up executive and administrative positions make for a great incentive.
  • Security – The number of finance positions waiting to be filled is astounding. Not only are finance managers in high-demand, but it is extremely unlikely that this demand will decline. Corporations will always require the insights of financial professionals in order to survive and thrive in the competitive market.
  • Career Satisfaction – Financial managers cite profound career satisfaction due to the overall challenging nature of both long-term and day-to-day responsibilities. The complexity of everyday tasks and high stakes make for a stimulating professional life.
  • Intellectual Satisfaction – Careers in finance are one of the few industries that encourage persistent pursuit of advanced education and rewards such intellectual pursuit in numbers and dollar signs.
  • Scheduling Flexibility – While it is not uncommon for financial managers to work anywhere from 40 to 60 hours a week, the time that they are allotted to take long vacations and days off affords them a relatively balanced routine in regards to work and personal life.

What is the Job Outlook for Financial Managers?

The Bureau of Labor Statistics anticipates the job outlook for financial managers will increase by 17-percent over the next ten years. This projection, however, is not consistent across every industry in which financial managers are employed. For example, due to the fact that the majority of banking transactions are now conducted online, the need for placing financial managers at physical locations is projected to drop as more and more branches are closed and fewer new branches are opened.

On the other hand, the increase in need for financial managers who specialize in international affairs and foreign operations is anticipated to rise. Financial managers specializing in investments and risk control should also expect to see a spike in their options for upward mobility. And finally, the financial managers who will perhaps experience the highest demand for their services are those who specialize in the direction and coordination of investments and cash assets management.

What Professions are Similar to Financial Management?

Loan Officers

Typically employed by banks and other types of financial institutions, loan officers assess the credit ratings and eligibility of business owners and individuals who seek a loan. Loan officers are responsible for providing loan applicants with financial consultation, authenticating their identities and income, confirming that loan contracts meet governmental regulations, and endorsing a loan’s approval.

Personal Financial Advisors

Personal financial advisors serve as consultants and financial educators for individuals and families. Personal advisors help people decide which ventures they should invest in, how to budget their income and cash, how much money they should be saving, and which insurance companies and policies are best suited to protect their assets, health, and familial heirs in case of death.

Public Accountants

Public accountants enjoy one of the most diverse ranges of specialization within the entire financial sector. While public accountants generally focus on corporate tax law and provide advices for individuals, they also frequently manage bankruptcies, advise over contractual disagreements, and even serve as forensic investigators in cases of money laundering, fraud, and other financial crimes and legal offenses. 

Insurance Underwriters

Insurance underwriters are responsible for determining whether or not an agency should supply an individual or business with insurance — and if so, defining the terms, premiums, and coverage for which those clients are eligible. To decide whether or not a potential client fulfills the criteria, insurance underwriters use software programs to analyze the statistical risks associated with insurance.