Responsibilities of a Financial Department
A very important role of the financial department is mainly concerned with taking financial decisions in the context of short term business goals. The short term, medium term, and long term goals are generally determined by your business, so the financial forecasts your financial department gives are therefore synchronized with your business plans. Therefore, it is imperative to have an efficient financial department that meets your expectations and is not too subjective. An ideal financial department should be able to provide comprehensive solutions for all your financial requirements with a minimal cost. The objective is to help you achieve financial stability and build up a culture of trust within the organization.
While making sure you have a sound financial department, there are some things you can do to assure a solid operation and long lasting relationship. You can make sure your finance team is comprised of professionals with relevant experience in their respective fields. They should also be well-educated and trained in order to provide you with the best advice and recommendations in your line of business. For example, your finance department should be able to provide you with options for your finance needs; your finance team should be capable of producing a balanced scorecard analysis that details every aspect of your finances from top to bottom. Your scorecard is essentially a tool that helps you make the right decisions regarding your finance department, so make sure it remains functional and updated.
Your financial department should include both receivables and accounts receivable services as part of its offering. Most businesses today purchase invoices at a discount in order to improve cash flow and reduce expenses. Invoicing is typically an onerous task for many business owners, so it is important to ensure that your finance team has mastered the art of invoicing to create accurate, easy to use, and competitive invoicing systems that suit your business needs. Invoicing software is ideal for smooth and hassle free invoicing.
Your financial department should also develop a comprehensive collection strategy for its bills. It should monitor bills every day including outstanding balances, accrued interest, penalties, and fees. Your collections manager should be able to generate invoices for every day in every region of your operations. Proper collection strategy is vital to the success of your business, so your finance team should be skilled in developing effective collection strategies.
Your chief financial officer (CFO) should report to your senior management on a regular basis, reviewing cash flow reports and financial statements. The CFO is ultimately responsible for the overall health of your company, so it is important that your financial department is strong and efficient. Your CFO can set the company's financial goals, develop budgets, ensure that all expenses are incurred, and analyze the effectiveness of strategic initiatives. Your CFO should also have knowledge of the company's internal operations in order to implement business operations in a timely manner. In short, your chief financial officer should know how to manage money!
Every financial department should track and audit incoming cash. Your CFO will perform audits of both cash and non-cash transactions, but this task should not be left up to the junior employees. You need your CFO to perform intensive audits of incoming cash to make sure that your company is recording the financial transactions accurately. These audits should be performed on a monthly basis. For instance, your CFO could perform a monthly review of all cash and non-cash outgoing cash transactions, perform daily inventory scans to identify overstock or under stock items, perform monthly reconciliation searches per month, and review balance sheet data entry to identify irregular transactions.
As a part of your financial department's responsibilities, your bookkeeper should be well versed in the fundamentals of bookkeeping. Bookkeepers are charged with maintaining accurate bookkeeping records and generating reliable financial reports. In general, bookkeepers are responsible for preparing and reviewing financial reports on a monthly basis, preparing internal financial reports at the beginning of each fiscal year, analyzing the day to day financial records of your business, preparing internal tax reports, preparing quarterly reports addressing your business income statement and balance sheet, preparing your company's balance sheet, and closing your books at the end of the year. Your bookkeeper may also perform other duties such as managing your company's budget. Whatever your company's bookkeeping needs, your bookkeeper will be indispensable to the smooth operations of your business.
Are there other roles that your business owner should be aware of? Many people assume that financial accounting and payroll are the only two responsibilities of a CFO, but in reality there are many other responsibilities that an individual with this title may encounter. If you're thinking of expanding your business, you should hire an accountant with knowledge of payroll administration, bookkeeping, CRM software, payroll taxes, EI and CPP, health, SSA, retirement and insurance, warehousing and distribution, freight forwarding, and more.