A finance team manages the money in an organisation.
Larger organisations will have more specialised finance teams with many levels of management. In a smaller business, it may be the owner or a small team who have broader roles and greater responsibility.
The best way to understand the responsibilities of an organisation’s finance team is to split the roles and responsibilities into:
- Accounting and reporting
- Strategic financial management
We will explore these in more detail below.
Finance Teams: Accounting and Reporting Functions
The accounting team is the foundation of a finance department.
It manages the preparation of balance sheets, financial statements, cash-flow reports, day-to-day record keeping and reporting, including all payroll, accounts payable and receivable.
It also manages and conducts all internal audits and controls, and tax and reporting functions. It makes sure that the organisation is in line with regulations and is in good financial health.
The different accounting roles include:
Record Keeping and Reports
This involves keeping track of all transactions and financial events, ensuring good records are kept.
These records are kept safely for several years to indicate the organisation’s growth –whether it is making a profit or a loss – and to keep track of money owed to investors and other partners.
An organisation’s records are used to budget and forecast the future and are checked by banks, tax officials and external auditors to make sure that everything balances out.
Accounts Payable and Accounts Receivable
Accounts payable (AP) is the department in a finance team that is responsible for making payments to outside partners for goods or services.
Accounts receivable (AR) tracks money that comes into an organisation for goods or services from consumers/clients. It will also send reminders, interest charges or late charges.
Usually, receivables and payables are tracked using a computer system and are reviewed at the end of a period (for instance, at the end of the month, the quarter or the year). This ensures that all the money moving in and out of the business is accountable and that all credits and debits are in agreement.
This can help to determine the profit or loss a company is making and identify opportunities for improvement. It is also called balancing the books.
Payroll
Payroll is a critical function that makes sure all employees are paid accurately (calculating overtime, paid leave, etc.) and in a timely fashion.
Additionally, a payroll department makes sure taxes, pension contributions and other benefits are accurately calculated and paid on time to the necessary agencies.
Finance Controls
A financial controller takes a senior role in an accounting team and makes sure all financial processes follow legal guidelines and compliance in regards to fraud and theft by implementing certain internal controls.
They oversee all financial activities to make sure that they all reconcile and that all transactions add up. Financial controllers also liaise with external auditors.
Finance Teams: Strategic Finance Management
The finance planning team or financial strategy team looks at the overall picture to assess organisational health and to plan short and long-term goals.
Financial planning teams will also use current records and reports to predict the growth and future trends of the company.
The strategic finance team creates forecasts and plans to ensure growth, manages and mitigates risk, looks at ways to increase capital, manages budgets and financing options, and liaises with investors.
A sound strategic financial team has a view of the complete picture of company operations and considers how every function and role affects the overall financial position of the company.
The different strategic finance management roles include:
Financial Planning and Growth
The financial planning team analyses reports from the accounting team and uses market trends to predict how the organisation will perform within a month, quarter or year.
It can provide insights into upcoming issues or potential profits based on trends and make strategic decisions based on these.
Risk Management
Risk management teams can identify, evaluate, prioritise and mitigate risks that affect a company and its functions.
A risk manager attempts to predict internal changes (a new venture in the organisation that isn’t as successful) and external changes (a recession in the economy, currency fluctuations) and uses the available resources to minimise and monitor the impact this might have.
Risk management can also help to maximise opportunities by being aware of market changes and investment opportunities that can increase the company’s profitability.
Capital Budgeting
Capital budgeting looks at the various options and projects available for investment. Some uses of capital budgeting include land acquisition, a merger, or purchasing a fixed asset such as new machinery.
The idea is to choose projects that increase profitability, maximise it and make sure it increases the organisation’s capital and growth.
Treasury
The treasury team oversees and looks after an organisation’s cash and makes sure that there is always enough available to meet the immediate needs of the business.
Treasurers work alongside other teams to forecast, predict the future needs of the company and make investments to ensure that there is a constant stream of revenue.
Financing
Financing involves the availability of funds, the expenses and obligations of the organisation, and revenue streams. It determines how much money there is and identifies different sources of income, such as investors or banks.
Investor Relations
Investor relations is the public relations arm of the finance team and deals with investors, shareholders and other stakeholders that have an interest in the company’s finances and stability. It provides investors with reports on the company’s performance or future changes.
It also carefully manages and cultivates relationships with investors to ensure ongoing support and investment.
Corporate Strategy
Corporate strategy provides an overarching view of the organisation.
It is usually undertaken by more senior-level employees or managers, who understand each of the functions of the business and have the knowledge and insights to make decisions on which investments and financial planning options would maximise growth and profitability.
Finance Team Job Roles
CFO (Chief Financial Operator) – The head of the finance department. They oversee the entire finance department and are particularly involved in financial strategy and the health of the organisation.
FC (Financial Controller) – Oversees accounting functions and manages the team that oversees all the analysis, reporting, budgets – the more immediate financial needs and management.
Treasury Manager – Responsible for capital and finding the best investment opportunities, developing relationships with outside stakeholders, optimising and managing banking and credit relationships and managing and minimising costs.
Chief Accountant or Accounting Manager – Responsible for all accounting and reporting activities and the day to day running of the organisation's finance requirements.
In larger organisations, each specific area will also have line managers and supervisors to make sure that everything runs smoothly.
Careers in Finance
Finance is a popular career. One of the most common pathways to a career in a finance department is through a university degree. However, many finance team jobs are also open to school leavers.
You can also gain an insight into a career in finance through a summer internship or a graduate work programme.
Finance career salaries can vary depending on the job position, skills required and location. London salaries can be a little higher than the rest of the UK.
According to Payscale, a London salary for an entry-level accounting job is around £21K and the average salary is about £33K. For financial manager roles, the lower end is about £25K and the average is around £40K.
Popular entry-level career choices in finance teams include:
Financial Planner – Supports organisations with managing their finances, crunching numbers and applying accounting principles to plan future financial trends.
Financial Analyst – Researches bonds, stocks, companies and industries to support investors with stock/bond offerings, mergers, acquisitions, expansions and restructuring. They need to carefully analyse financial statements and data to build financial models and provide suitable solutions and advice.
Investor Relations – Prepares and presents company information about new ventures and developments, business opportunities, and corporate clients to investors, media, external analysts and other stakeholders.
Budget Analyst – Analyses budgets and impact of company ventures, growth and development opportunities and whether they are effective or require changes.
Accountant – In a larger organisation, this can be highly specialised to payables/receivables, tax, balance sheets, reporting and compliance and many other areas. In smaller companies, the accountant may need to deal with many different tasks.
Finance/Accounts Assistant – An entry-level role involving admin related duties.
Key Skills for a Career in Finance
A career in finance is a popular choice and recruitment cycles are often fast-paced, but there are lots of opportunities available.
To be successful during the recruitment process, you need to display some of the commonly required skills such as:
An aptitude for analysis – Showing your understanding of financial data, interpreting financial reports, conducting research across the organisation, generating statistics to drive the business forward and knowing the market risks.
Knowing your numbers – Displaying your mathematical proficiency is essential. While all jobs don’t deal with the in-depth financial analyses, knowing how numbers work and having a passion for them will put you ahead.
Time management – Finance is fast-paced. Sometimes there are critical timelines where many tasks need completion before a deadline. Examples include board meetings, end of quarter and end of financial year (taxes), AGMs, regulatory and policy changes, board meetings, and company report publications (interim and annual). Excellent time management skills and the ability to work under pressure will set you apart.
Communication – Not a skill commonly associated with finance but required for financial transparency. You will need to communicate with colleagues, investors and other stakeholders who may have no prior knowledge of finance. The role will require a high level of communication and diplomacy skills, especially when explaining issues such as budget cuts or falling share prices.
Innovative thinking – FinTech (financial technologies) and RegTech (regulatory technologies) are becoming common in financial services. Early career finance students need to be keen to understand and embrace innovations and be comfortable using technology.
Next Steps in a Finance Career
Many finance team members study for further accreditation or certification to give them added knowledge and skills.
Accreditations such as ACCA, CIMA, CISI, CPA, CA, CFP and many others are globally recognised and can help with promotions or salary negotiation. Additionally, these official accreditations will indicate your level of expertise and education when job hunting and suggest the standard of work you are capable of.
It is strongly recommended to upskill as you continue your career in finance.
Finance Departments of the Future
The world is changing fast and finance departments must adapt quickly. Fluctuating economic conditions and market volatility have caused organisations to pay close attention to their accounting and strategic finance functions.
Finance departments need to make changes to boost performance and become cost-effective, these include structural changes and streamlining processes.
Finance departments often have an overwhelming number of tasks and requirements to make sure they are in line with regulations. They also need to meet the day to day needs of running an organisation.
This means that essential tasks such as payroll, reporting, balancing accounts, budgeting, etc. take precedence while growth, financial planning, innovation and strategy are not always a priority.
With the increasing developments in FinTech, CFOs and other financial managers must embrace, understand and invest in technology to improve their financial systems. According to the McKinsey Global Institute, 40% of finance activities, such as revenue management, cash disbursem*nt and general accounting operations, can be completely automated.
Ideally, technology and streamlined processes will support the future of finance departments. The use of technology will provide quick access to real-time financial information improving internal financial operations. Using advanced analytics will provide support for financial decisions and growth opportunities resulting in improved organisational performance.
