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What are the fundamental functions of a finance manager?

14/03/2022 minute read Amanda Grant

The notion of a finance manager may mean different things to different companies, depending on what this person is responsible for within their business. As the role continues to evolve over time, it’s even more important to define it, so that finance managers can improve their performance.  

In this article, we go about defining the role of a finance manager and explain what their main responsibilities/objectives typically are. We also discuss how this function has changed over the years and provide tips on how finance managers can better achieve their goals in today’s market.    

How do you define a finance manager?

There is a range of terminology used for the different roles within a company’s finance function, some of which can be differentiated easily, while others are used interchangeably. Some examples of these titles include finance manager, head of finance, CFO (chief financial officer), finance director, and financial controller.

CFO and finance director are sometimes used synonymously. These individuals sit above the finance manager and are usually positioned on the board of directors. They are essentially the highest-ranking employee when it comes to finance, reporting directly to the CEO. They will be expected to influence top-level business decisions.

A financial controller is the head of all accounting-related activity. They will sometimes report directly to the CFO but are generally not seen to be as senior as a finance manager (although their duties are wide-ranging and complex). Finance manager and head of finance are also terms that can mean the same thing. It’s the size of the business that will dictate whether all these roles are represented and how they relate to one another.

The responsibilities within a finance team cover accounting, invoicing, payroll, tax-related matters, analysis, forecasting, budgeting, expenses, and investment, to name a few. The finance manager’s job is to orchestrate these functions and provide adequate support to those involved.                  

What are the main responsibilities of a finance manager?

  • Fund management

The finance manager must attain funds for the finance team. This could include sourcing funds internally from the relevant stakeholders, or externally via financial institutions if necessary. They must allocate these funds throughout the team accordingly too, placing an emphasis on the more important priorities.  

  • Cash flow management

They should ensure there is enough fluid cash on hand at any given time, to keep the company ticking over smoothly. If there’s too much money tied up in fixed assets, this could affect the business’s ability to pay energy bills, rent, employee wages, or supplier fees. If there’s an abundance of fluid cash, it’s also their responsibility to spot opportunities to invest this elsewhere.  

  • Forecasting

Additionally, they should take the lead when forecasting future financial performance, as this can feed into key strategic decisions. By analysing the data surrounding past performance, they can develop an accurate picture of what is to come, which then informs how cautious or bold the company should be.    

  • Maintaining profitability

The finance team should assist in maintain profitability for the overall business. The finance manager is best positioned to analyse the state of play when it comes to income/expenditure. By looking at the numbers in great detail they can determine opportunities for new income streams, while finding methods to cut costs where possible too.  

  • Budgeting

They should also be at the heart of budgetary control. The annual budget helps to reduce risk, by highlighting how much can reasonably be spent (without putting the business in peril). It ultimately serves as a safety net, and just like the forecasting process, it’s determined by using sound data.   

  • Risk analysis

The finance manager should always be on the lookout for risks that could financially detriment the company. This can sometimes be achieved by implementing a risk management strategy. With an overview of all activity, they are perhaps best equipped to notice any impending roadblocks or threats. As a result, they can then put measures in place to counter these risks. By keeping an eye on the wider industry, they can pivot in new directions at the right moment.    

  • Financial reporting

They should be adept at creating reports and analysing data, as it is ultimately their responsibility to communicate performance back to the finance director/CFO. Not only should these reports be thorough and accurate, but they should also be presented in a way that’s easily comprehensible, so that necessary actions can be determined. By generating reports often, the finance manager can use the relevant metrics to direct and assist their team (in the pursuit of better results).   

How has the role of a finance manager evolved?

The role of a finance manager has continuously transformed over the years, with perhaps the biggest changes taking place within the last decade or so. It’s crucial for finance managers to understand this evolution, not just so they can understand their responsibilities now, but so they can predict where it might be heading too. This evolution can be driven by changes within the industry, as well as political and environmental factors in the wider society too.

Today, the finance manager is expected to have a more substantial impact on strategy. In the past they may have only needed skills linked to number crunching, but it is a much more nuanced and all-encompassing role now. They’re expected to provide valuable insights that are backed by data. They should also have some fundamental knowledge of each function within their team too. This allows them to be more personal with their managerial approach, whereas previously it would have likely been a more ‘top-down’ method of management (with more of an authoritarian style).

The pandemic had a lasting effect on finance managers. For example, they must now use greater ingenuity when searching for revenue streams. They also had to master ways of effectively managing remote workers. Changing perceptions around workplace productivity and employee wellbeing have impacted managers too. The finance manager must have a high level of emotional intelligence to get the most out of each person. And they must provide the right amount of autonomy/flexibility in terms of the direction they give and the working patterns they allow.  

Technology has been one of the biggest drivers of change for finance managers in recent times. They must be aware of the latest digital tools, knowing which ones are most suitable, and when is the best time to implement them. Utilising the likes of Cloud technology can have a significantly positive impact on staff (and the output they produce). Finance managers must be proficient with these technological systems too, to work optimally.   

Ways to achieve your goals as a finance manager

  • Hire selectively

Hiring is arguably the most crucial part of a finance manager’s role, as this will determine the type of team they’re sitting above. It’s ultimately the team that will be tasked with turning the manager’s ideas into a reality. Of course, people with the necessary accounting experience and expertise should be hired, but other traits should be prioritised too. How creative are the prospective employees, can they think outside of the box, and how good are their interpersonal skills? It’s better to assemble a team that will challenge the existing methods (in a non-disruptive way), rather than a team that will simply accept what is in front of them.   

  • Delegate as much as possible

When the right people have been taken onboard, it becomes much easier (and less stressful) when delegating key responsibilities. Many finance managers will feel obligated to do everything themselves. But the whole point of having a team is being able to share the workload. Once every task has been assigned to the most appropriate person, the finance manager can act as an overseer, ensuring each cog in the mechanism is acting as it should be.     

  • Facilitate continuous learning

The finance team should always be learning, no matter how experienced they are. This helps to ensure they’re up to date with the latest skills they need. The increased expertise puts them in a better position in terms of their career, which will likely make them more loyal. The finance manager could arrange for employees to complete relevant courses, and ensure the fees are provided by the business. They could also give them time to complete training (if there are any gaps in their knowledge). The workplace should be a place of continual education, with workers encouraged to read about the latest industry/competitor news.   

  • Provide a balance of freedom and governance

Staff should have a level of freedom in their role, as this allows for more creative problem-solving, and boosts self-esteem (if they can see their opinions are valued and trusted). A level of self-governance can often generate the best results when it comes to employee performance. However, this should of course exist within some form of structure (and with predetermined targets), so that the necessary level of motivation exists, and so results are aligned to business objectives.   

  • Improve personable skills

Any manager’s success is heavily dependent on their ability to understand people. A finance manager should of course be good with numbers, have an analytical mind, strong communication skills, and knowledge of their respective sector. But by having excellent personable skills, they can gain a sense of how fulfilled staff are and identify which management style suits each individual best. These skills can be honed on the job each day, or perhaps by completing a specific management course.   

  • Data driven decisions

In the modern world, companies are at a huge disadvantage if they don’t use their data to its full potential. Data is now one of the most important commodities, and every business possesses an abundance of financial data. Finance managers should use this information when making decisions, rather than simply relying on instinct. Finding a way to ensure this information is accurate and up to date should be a top priority too.     

  • Embrace the latest technology

Tasks can be completed to a much higher level when the latest technology is used. For example, a Cloud-based accounting system allows users to access work remotely, which ensures finances can be updated instantly, regardless of where the employee is. Automation is another powerful tool, as it increases efficiency within finance teams, and removes the mundanity that can come with repetitive tasks. Complex calculations can also be completed much faster and with fewer mistakes. Workers can add even more value by instead focusing on complex/high-level tasks.     

Which Cloud-based software can support finance managers?

At Advanced we provide a Cloud-based accounting solution called Advanced Financials. This system empowers finance managers, by providing functionality around accounts payable/receivable, sales invoicing, credit management, bank reconciliation, purchase management, and more. It was designed with the specific needs of finance teams in mind. Advanced Financials was also made to be simple to use, despite being capable of completing complex processes.

Serving as a central point of data for the team, it ensures there is a single version of the truth, removing the need to reconcile financial information from multiple places. This also makes it much easier for the manager to keep track of tasks, in terms of what has been completed, and who is accountable.

With built-in dashboards, Advanced Financials provides an instant view of key metrics relating to the company’s financial performance. And with over 1,000 customisable reports, there’s sure to be a template that fits the needs of the finance manager. This makes the report-building process far less strenuous and time-consuming. As the system is Cloud-based, these reports are fuelled by up-to-date information, so they can be confidently presented to the board of directors and used to influence key strategic decisions.   


If you’re a finance manager who’s looking to keep up with the times, and to perform optimally within your role, be sure to read more about our Cloud-based accounting software.