An Overview of Finance Management
Thursday, September 3, 2015, 6:00 AM | Leave Comment
In the 21st century, business competition is tougher than it has ever been. In the past, a business had to compete with other local businesses and possibly a national chain. Now, many local businesses have morphed into national chains, and the national stores have become international conglomerates.
Most businesses operate online, delivering their products or services around the world. To compete in this difficult field, you have to diversify your business.
This diversity can create more complexity in your business. As your business becomes more complex, it requires more specialised employees to analyse all of the different kinds of data coming in. When it comes to financial information, a finance manager is crucial to keeping a business operating in the black.
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What a Finance Manager Does
In the broadest sense, financial management is managing money in a business or organisation.
A good manager will handle the funds in a way that helps to accomplish the goals or objectives of the business.
The manager will be responsible for performing many different jobs, one of which is raising money.
The manager will create strategies for increasing the funds available to an organisation.
Also, he or she will create a strategy for how to allocate the finances; this is called capital budgeting.
The budgeting can be long term or short term, depending on the needs of the organisation.
A finance manager might also handle the dividends paid to shareholders.
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Dividends
Essentially, dividends are payments a corporation makes to shareholders. This is usually related to the distribution of profit.
When a corporation earns a surplus of money, it can put that money back into its own business; this is called retaining earnings.
Alternately, the corporation can pay some of this money back to its shareholders; these payments are called dividends.
Dividends can be paid in many different ways—they can be cash or direct deposit into shareholder bank accounts or additional shares of the company.
How the shareholders are paid depends on the agreement made beforehand and falls under the purview of a finance manager.
Depending on the manager’s judgement, companies can pay dividends on a schedule or at any time.
Typically, dividends that are paid at a time other than a scheduled time are called special dividends.
Alternately, instead of offering dividends on a schedule, corporations can offer dividends based on shareholder activity.
This is not as common for corporations, but is quite common for cooperatives.
As stated earlier, the decision of how and when to allocate dividends often falls to the finance manager.
A finance manager will have dozens of tasks related to raising, allocating, borrowing, and disbursing a business’ funds.
The tasks can become quite complex; that is why many finance managers seek to further their education to increase their proficiency.
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Education
As you have seen, dividends are just one aspect of a finance manager’s job, and they can be quite difficult to master.
Whether you are already a finance manager or looking to become one, finance management courses can provide you the skills necessary to succeed.
Many people might think of a course as something for a novice or someone who is still in school, but that is not true.
Different courses are tailored and designed for every skill level, from the totally uninitiated to the experienced manager looking to add a few more skills to their skill set.
The world of business and finance is changing faster than perhaps ever before.
If you were to look at the business landscape as recently as ten years ago, you would see something completely different from the current market.
Ten years ago, only the most dedicated business people had smartphones, an unstable global marketplace was beginning to flounder, and shopping online was still considered a risky proposition.
Now, everything has changed; the economy in many places has recovered, smartphones are ubiquitous, and online shopping is preferred by millions of people.
So, if you began your finance management position ten years ago, you were probably very well-qualified at the time.
Now, ten years later, are you still as qualified? If the business world is changing faster than you can keep up with, you might want to consider enrolling in a class or two to brush up on what you might be missing.
Also, your business could be changing faster than you can keep up with; if you are, hopefully, achieving high levels of success, you might be unprepared for the influx of new capital.
A course can teach you how to handle and allocate your new resources. If you are in the information technology sector, your business is probably changing even faster than the rest of the corporate world.
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IT Finances
Finance managers for IT companies are some of the ones who benefit the most from courses to hone their skills.
The information technology field is, by definition, on the cutting edge of technology. That means new ideas are constantly being introduced to these businesses. It can be difficult for some managers to keep up.
Also, in the information sector, much of the business happens over the internet. The internet, being a global collection of servers, does not respect geographic boundaries the way older businesses do.
That means, as a finance manager, you will be dealing with clients from around the world. That also means you will be dealing with currencies and regulations from around the world.
If your business is expanding into international markets for the first time, you might want to look into a course that will teach you how to handle the new influx of international currencies and regulations.
In the 21st century, business is constantly evolving, and a business only stays viable if it allocates its resources well.
That means a good business needs a good finance manager. Whether you have already worked as a finance manager or are looking to enter the field, taking some courses can make you more attractive as a new hire and more skilled as a current employee.
These qualities are indispensable when it comes to your employment future or your job security.
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