Financial planning helps managers understand the firm’s current status, plan and create processes and contingencies to pursue objectives, and adjust to unexpected events. These could be shareholders in a publicly traded corporation, the owner-managers of a “mom and pop” store, partners in a law firm, or the principal owners of any other number of business entities. For-profit businesses work to maximize the wealth of the owners. Financial planning allows a firm to understand the past, present, and future funding needs and distributions required to satisfy all interested parties. Financial Planningįinancial planning is critical to any organization, large or small, private or public, for profit or not-for-profit. Compared to a VP-F, a CFO is less of a “hands-on” manager and engages more in visionary and strategic planning. The CFO is also forward looking and responsible for strategic financial planning and setting financial goals. The CFO sets policy for working capital management, determines optimal capital structure for the firm, and makes the final decision in matters of capital budgeting. The chief financial officer, or CFO, is in a “big picture” position. The chief responsibility of the VP-F is to create and mentor a sufficient and qualified staff that generates reports that are timely, accurate, and thorough. The vice president of finance (VP-F) is an executive-level position and oversees the activities of the controller and treasurer. Where a controller may face inward toward the organization, the treasurer often faces outward as a representative to the public. Treasurers are also responsible for investing excess funds. A treasurer may be responsible for structuring loan and debt obligations and determining when and from whom to borrow funds. However, the treasurer is also responsible for monitoring cash flow at a firm and frequently is the contact person for bankers, underwriters, and other outside sources of financing. In most organizations, the treasurer might assume many of the duties of the controller. They aid internal and external auditors and are responsible for monitoring and implementing the day-to-day financial operations of the firm. Controllers are concerned with payroll functions, accounts receivable, and accounts payable including taxes, inventory control, and any number of short-term asset and liability tracking and monitoring activities. Controllers are in charge of financial reporting and the oversight of the accounting activities necessary to develop those reports. The comptroller, or more commonly a controller, in a for-profit business relies heavily on a knowledge of accounting. Explain the role of finance and its importance within an organization.įinance has many functions within an organization, and there are many job titles to reflect the varied job responsibilities. By the end of this section, you will be able to:
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