The day to day of a financial manager is full of surprises and challenges because dealing with the financial part is not an easy task. Understand in this article what are the 10 challenges that a financial manager faces in his daily life. Good reading!

What does a financial manager do?

The financial manager is responsible for all the administration of the financial part of a company. In this way, the financial manager has an analytical and strategic vision, adding a lot of value to the company.

In the same way, he is a professional with a wide field of activity, from financial departments, banks, stockbrokers, or even acting as a self-employed person. In companies, he can occupy various positions as an assistant, analyst, consultant, or financial market advisor.

After all, the financial manager has a very busy routine, as he follows all the financial fluctuations of the company and the market.

10 challenges of the financial manager

First of all, every financial manager must be prepared to face the challenges of financial management. For this, it is not enough to have only specific knowledge in the financial area.

Thus, a financial manager must have knowledge in financial mathematics, accounting, administration, and even human resources.

Therefore, he needs to have an overview of the company with the aim of creating internal controls that will be used to analyze and predict future difficulties.

Thus, I will mention here 10 activities carried out by the financial manager that is real challenges:

  • tax management

  • Sales price formation

  • Audits

  • Accounts Payable Management

  • Accounts receivable management

  • investments,

  • balance control

  • Cash flow management

  • Analysis of financial statements

  • People management

tax management

First, having knowledge about the types of taxation is essential to identify which taxes will be levied on operations. It is through her that he will work out legal ways to pay fewer taxes.

In this sense, to achieve this, the financial manager must carry out several analyses, verify if he can avoid certain operations and look for alternatives more in accounts.

Thus, tax management is an activity that requires a lot of dedication and study on the part of the financial manager.

Sales Price Formation

Another important activity is the study to establish the selling price of products or services. After all, it is through it that the financial manager transfers the costs and expenses, the tax burden and the desired profit to the final price of the product.

Needless to say how important this study is, right?

After all, companies that decide to sell their products at market price without checking operating costs, fixed expenses, taxes, and desirable profit, may have a big loss.

Audits

First of all, carrying out audits in the departments that are supervised by the financial manager is extremely important to verify compliance with the processes that have been defined.

In this way, the analysis of reports and important data is carried out in the audit in order to significantly reduce problems and errors in the financial flow.

How do audits work?

Let's use the example below to understand how it works.

The purchasing department is under the supervision of the financial manager, and this department cannot exceed $10,000.00 in purchases in the month of June/2021. So, the function of the audit in this example is to verify if the purchasing sector was able to respect the authorized budget limit for the month of June/2021 or if there was any unforeseen event that caused the sector to exceed the  budget.

Therefore, the audit findings on the procurement process will indicate where the process should be changed or improved to adapt to the company's needs, in order to identify whether internal controls are working as expected.

Accounts Payable Management

First, for a company to have credibility in the market, it is important that it fulfills the commitments made with its suppliers and pays its debts on time.

In addition, accounts payable management controls and analyzes all financial obligations assumed by the company, that is, any type of payment, whether from its suppliers, employees, purchase of raw materials or others.

Therefore, if you have a department within the finance department that deserves special attention, it is the accounts payable department. After all, that is where the programming and finalization of the payments that have been agreed take place.

Accounts Receivable Management

First of all, since we talked about the outflows of values ​​in the management of accounts payable, it's time to talk about the entries of values ​​that is the management of accounts receivable! The accounts receivable department is responsible for managing and tracking the company's receivables.

Above all, competent management of accounts receivable can point out the need for new policies for granting credit to customers, the need for negotiations and possibilities for raising funds, as well as verifying that the deadlines for receipts are meeting the needs of the company.

Therefore, the management of accounts receivable is extremely important in the administration of any company, it is through it that the company can leverage the balance of accounts receivable.

investments

Beforehand, the control of financial investments is an important item that must be managed by the financial manager. If the company generates profit, it is necessary to apply a certain amount to guarantee a greater financial return, right?

In this sense, it is necessary that the financial manager seeks the best investment rates in the market and knows how to identify the periods in which the value must be applied according to the company's cash flow needs. Likewise, investments should be sought that are available in solid and reliable institutions.

Finally, it is important to emphasize that when the company has available resources, it is great that they are applied; however, these resources must be very well applied by the financial manager so that there are no losses.

Control of Bank Balances

Primarily, having tight control of bank balances is a basic task for any financial manager. In this sense, companies that do not have this control run the risk of using short-term resources and paying very high-interest rates.

However, the control of bank balances must be carried out daily through bank reconciliation, which will cross the information from bank statements with the financial information.

Therefore, from there, the financial manager can make the right decisions about the use of available resources.

Cash flow management

First of all, if the financial manager manages his cash flow well, he will have a great way to control the inflows and outflows of resources. In this sense, it is through cash flow management that he will visualize all the values ​​that will enter and leave the cash in a certain period.

In this way, it is possible to identify when the balance will be negative, making it possible to go after resources so that the balance is positive on that date.

Lastly, this analysis must be done for positive balances that will not be used in the short term, so that the company does not have money stopped.

Analysis of Financial Statements

In advance, the analysis of financial statements is an essential task of the financial manager. It is through it that he presents the indebtedness, profitability, profitability ratios, and many others.

Together with the information at hand, the financial manager can interpret and assist the company in decision-making. That is, it is at this time that the financial manager says where the company had good results and where it did not, pointing out improvements.

In conclusion, the analysis of financial statements is essential for the vision of the financial health of any company.

People management

At first, glance, if you think that by dealing with numbers, the financial manager does not need to learn to manage people. You are very wrong!

Often, financial managers need to deal with people. After all, only they can achieve the defined objectives.

In this way, managing people is an art for the few, and those who succeed become true leaders. Perhaps this is the biggest challenge for the financial manager and for any management.

About Author

He holds a master's degree from Columbia University's Graduate School of Journalism. Send business and startup tips to chandev@downkyamal.com