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The Key Functions Of The Finance Department In A Company

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The finance department is like the backbone of an enterprise. It holds everything together through effective accounting and statistics that keep everything in check. In a company, the finance department has multiple responsibilities. The primary responsibility we believe them to hold is bookkeeping, but they are also responsible for assisting managers in making and updating their strategic decisions.

Financial and Strategic Planning

An essential task of the finance department is concerned with managing daily financial decisions with long term company objectives. The long-term, medium-term, and short-term goals are hence synchronized through the enterprise’s financial predictions that your financial department provides. They are responsible for measuring your project’s success.

Finance and Leadership

People working in the finance department are unlikely to be good at management and leadership. But they play an essential part in providing critical data and information to the management to lead effectively. For example, if the company is going to launch a new product in the market, they will need the finance department’s support to give them a feasibility report. They will need information about how they can find funds for this venture and so on. The leadership also needs to know how the business is performing, and the financial department provides them with this information.

Below, we explain some other responsibilities of the finance department:

Day-To-Day Transactional Accounting

The primary job of bookkeepers in the company, or as we know them as the finance department, is to be responsible for day to day transactional accounting. Their responsibilities include tracking all the company’s transactions and the management of any reporting. Day to day record keeping and preparations of financial statements also is the responsibility of this department. As a manager or owner of the company, you need to know where it stands financially. When the finance department provides this information, then the management makes high-level decisions.

Here, in this article, we will also get to know about the day to day general accounting responsibilities include bookkeeping. Payroll, finalizing information for income statements, balance sheets, cash flow reports, and so on.

Management of Cashflow

The finance department of your company is also responsible for the management of the company’s cash flow. They make sure that there are enough funds for day-to-day tasks. It also includes the services to the customers and the credit and collection policies. There are also payment policies for suppliers. In most companies, a daily log is made so that they can systematically calculate the company’s ongoing cash needs.

Tax and Compliance

Having a registered business inevitably involves taxes. Paying tax, hence, means doing a lot of calculations and filling out numerous forms. Accountants often use financial statements and other information. The tax and compliance responsibility is to ensure all the government forms are filled and submitted on time. The finance department also works to minimize tax so that the company can gain maximum net income.

Contribute To Management and Improvement

When all the necessary tasks are taken care of, the finance department starts contributing to the company’s management and improvement of projects. They measure and report all the key numbers which can identify the success rate of a project. The company managers use the finance team’s information to understand where they lack and where they can improve.

Risk Management

The finance department of your company is also responsible for risk management. They identify, evaluate, prioritize, and mitigate the company’s risks. The finance department predicts internal changes for a new venture that isn’t working out so well. They also indicate the external changes that include the recession in the economy, currency fluctuation, etc. They use their available resources to minimize the impacts and monitor it for changes.

Risk management also helps maximize opportunities for a project by predicting and being aware of the market changes and investment opportunities.

Capital Budgeting

Capital budgeting observes and recognizes projects and opportunities in the market that can be worthy of investment. So its uses include land acquisition, mergers, or purchase of a fixed asset. The whole idea of capital budgeting for a company involves the main objectives of increasing profitability for the company. They aim to maximize the profit to ensure the growth of the company’s capital.

Conclusion

Some companies know that the organization’s finance department is a resource to assist the managers that run the business. With the ever-growing trend of outsourcing finance departments, it has become possible for even small-medium enterprises to access all the benefits of a finance department. And the best part is that it only costs a part of what hiring a complete finance team would have ideally cost. Professional help in financing is the key to keep the business up and to run. Without it, your business may have very little room for growth and sustainability.

Functions of Retailer

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A retailer is the last link in the chain of distribution of consumer products. He brings the producer in close touch with the consumer. He is a part of the distribution mechanism which cannot be dispensed due to his following valuable services

Distribution of Good

The functions retailers perform are the consequence of the separation of distance, time and information between producers and consumers. All retailers are involved in assisting in the physical movement of goods and in effecting a change of ownership. Retailers also hold stocks so that goods are available when required by the consumer

So, he plays a very important role in distributing goods to various consumption centers.

Consumers Choice

As the retailer is in close touch with his customers, he knows the demand, tastes and fashion of the consumer. This position enables the retailer to pass information on products to producers on behalf of consumers.

Storage Facilities

Retailers storage activities also help both producers and consumers. By ordering and accepting delivery in advance of the season, the retailer removes some of the risk of deterioration and damage and bears the costs of storage.

Buying and Selling Activities

Whether the retailer is supplied directly by the manufacturer or through a wholesaler, he buys in fairly large quantities and sells in the smaller quantities that are convenient for consumers use.

Credit Facilities

The retailer is often expected to provide credit facilities to his customers. This could be a selling advantage but is expensive to give and, in general, would derive from some relationship with the customer.

Grading and Packing

By dividing large unit quantities into consumer-sized amounts the retailer is performing a service to manufacturers as well as to consumers.

It would be highly uneconomical for manufacturers to package and ship their goods in the quantities demanded by consumers. But butchers, fruiters, tailors, and other retail traders are still concerned in their various ways with grading and preparing their goods.

Delivery Services

Many retailers offer delivery as an additional service. This is an expensive and a grocer, for example, who provided it would charge more for his goods.

Advice to Customer

Customers rely on the advice of their retailers when buying many goods, both those which are technically complex, such as motor-mowers or air conditioning plant, and also such apparently simple goods as packaged foods and dress materials.

The efficient retailer has a responsibility not only to advice on goods that are already established in the market, but to inform his customers of new lines as they becomes, available and to stock them if he believes that they will be needed.

Functions of Wholesalers

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The wholesaler is a link between producers and retailers. He may be said to provide the economic utilities of time, place and possession which may lead to economies in distribution. On the one hand he performs the services to manufacturers on the other retailers.

Functions of Wholesales To Manufacturers

Financial Aid

Wholesalers often supply a more direct form of financial aid to producers. Wholesalers will buy in advance of a season or will accept and store several shipments, paying for them in advance of the time they will be resold to retailers.

Wholesalers also help by generally paying their bills promptly, thus further reducing a manufacturer’s capital requirements.

Market Information

Since the wholesaler is in touch with both retailers and manufacturers, he is in an ideal position to pass back information about what products are selling and what criticisms are being made. This will also be reflected in the wholesaler’s orders to the manufacturer, of course.

Reduction of the Cost of Distribution

As wholesaler is intermediary trader between the manufacturers, and the retailers, he has a two way traffic in the assembly and disposal of various products. This reduces the cost of transport and storage.

Buying in Advance of Demand

The wholesale trade must anticipate what customer will be buying in the coming months.

Buying ahead also provides a steady market for manufacturers.

Wide Operation

Most manufacturers are small and have financial resources. They can build a good product, but they need some one to sell it. The wholesalers perform this service.

He efforts to sell to small scattered retailers because he represents many manufacturers and can carry many items. Consequently, he can usually get orders large enough to justify his wide spread operation.

Function of Wholesalers to Retailers

Ware Housing

Storage is expensive as regard rent and wages. Neither manufacturers nor retailers are equipped to hold large stocks, nor do they want the expense and trouble through their warehousing activities.

If there were no wholesalers and retailers would be forced to carry these stocks with them which would mean so much inventory cost.

Credit Facilities

The wholesaler finances the retailer by grating him credit. He often derivers the merchandise in advance of the season but does not require payment until for his goods with the money he receives for selling them

By granting credit to retailers, the wholesaler is indirectly providing financial help to manufactures.

Minimum Inventories

The wholesaler consolidates retailers, purchases for them. Generally he buys and keeps on hand stocks from many manufacturers. The retailer can, therefore, order small quantities of anyone of many manufacturer’s products. By so doing shipping costs to retailers are greatly reduced.

Prompt Services

The wholesaler knows his community’s requirements so well that he purchases stocks for future delivery. This enables the retailers and their customers to obtain goods more promptly than would be possible if no wholesale supplies were at hand.

Lower Margin

Wholesalers buy and sell goods taking title to the goods, then deriving lower profit from the marginal difference between the price at which they buy and the price at which they sell.

Break Bulk

Wholesaler assembles a different kinds or products in large quantities from several manufacturers. Income trades, he breaks bulk, graders, sorts, packs or prepares good. He thus sells goods under his own brand name.

Reduction of Marketing Risks

Wholesalers usually guarantee the merchandise they sell and the retailer can thus get immediate satisfaction on claims involving defective merchandise.

Similarly, by taking title to the merchandise, a wholesaler reduces a manufacturer’s risk. If the product deteriorates, goes out of fashion, or for some other reason does not sell, the wholesaler usually bears the burden.

Managerial Services

Some of the managerial services provided by wholesalers today include training or retail sales clerks, advising on, and helping with, store displays and store layout, and establishing better systems for inventory control and accounting.

Whole salvers can supply information regarding new products, competitors, prices, special sales by manufacturers and other data regarding market conditions.

Delivery

Wholesale firms hold a key position in the delivery of goods to retailer near to the retail market. He promotes the adjustment of equilibrium of demand and supply of a particular product. He thus helps to prevent the tendency of fluctuation in the prices of goods.

Types of Business Functions

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Every running business is backed up by various shown and hidden functions helping it generate sales and earn revenues. These Business functions or tasks usually vary in different businesses but overall they are the same from production to qualify sales.

10 Different Types of Business Functions

If you are new to business world and thinking to start profit generating business in your area or somewhere in world, there are many but 10 most important things to consider when starting a new business. Once it is started, the next step is to perform functions.

Creation and Distribution of Utilities

Business involves creation and distribution of goods with the object of earning profit. A business man conducts this process for his own interest. It also includes the mining, communication process and transportation functions.

Planning and Controlling Function

It is one of the most difficult business functions in the business undertaking. It is largely concerned with the determination of policy for plant and following them through production. Any divergence from the target may affect the function to be performed at the next stage. 

Technology and Engineering Function

Engineering department in large technical industries advise the supervisors on technical matters. Research, development and designing of the product function is often performed under the engineering department.

Finance Function

You do everything to be Financially Independent and this is the most important function in the private enterprise by which all the activities are conducted. The funds are in the custody of treasurer who is liable for all types of payments belonging to money. Credit control, purchase discount, wages and loans are also financial function.

Manufacturing Function

Manufacturing is primarily concerned with the conversion of raw material into finished or intermediate. In other words it is the creation of form utility. Manufacturing process may only involve the changing of the nature of the material, as this function is done in refining or chemical industry, But really it includes both the changing of the nature of the material and its form as it is conducted in the steel industry.

Personnel Function

The personnel function is conducted by personnel department which is also categorized into 3 sub categories and named as Human Resources Department, Personnel Management Department, and Industrial Relation Department. Usually, the following functions are centralized by this department:

  • Organization
  • Establishing policies
  • Staff development as promotion policies, training program
  • Remuneration (i.e. job evaluation, grading, merit rating, the establishment of wages, and salary structure.)
  • Relationship scheme through trade unions, counseling, etc.
  • Casting and budgeting
  • Record Keeping

Accounting Function

Businesses understand accounting importance, So, they hire an accounting department to perform professional service. The accountant or chief accountant is in charge of this department who conducts and supervises the financing, accounting, budgeting, and costing activities; regarded as one of the tools of administration.

Purchasing Function

It is one of the highly important functions in manufacturing organization. There are several specialists in their respective fields in the purchase department who also increase the efficiency of work and help to maintain reasonable prices of the product. The purchasing function is closely related to sales.

Sales Function

It is productive function of business which is generally performed by sales department. It involves transfer of ownership of goods from one hand to another in exchange for money.

Sales function also includes grading, where housing, transporting, sorting, collecting and packaging matters. These sales functions are performed with Modern & Traditional Selling Techniques.

Organization

Organization is generally regarded as grouping of activities in a coordinated manner with a view to obtaining maximum benefits. In the words of Richard “Organization is the structural relationship between the various factors in an enterprise”.

According to this concept three factors of an enterprise i.e. Men, Material and Management are combined to attain the objects of the business. So organization is the relationship between the various objectives and factors.

Some writers refer the word ‘organization’ to the individuals functioning within an organizational unit as well as to the whole functioning. However, it is advisable that organizational changes should be made according to changed circumstances in order to meet present environment.

The Primary 4 Functions of Management – Planning, Organizing

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Management sciences have proven its importance in every part of life no matter who you are, a worker at some organization or owner of the organization you must have a good knowledge about management in order to be successful. Because whoever you are managing is always a part of your job. It is also one of the main Characteristic of Entrepreneurs.

Management is known as a process involving the responsibility of economical and effective planning and regulation of the operation of an enterprise to achieve its long term and short term goals using various strategies…

This process of management contains various activities and elements, these activities are common to each and every manager irrespective of the status and level.

Management Definitions By Different Experts

There are four functions of management i.e. planning, organizing, actuating and controlling.

George and Jerry

To manage is to forecast and plan, to organize, to command and to control.

Henry Fayol

Its POSDCORB” where P stands for planning, O for organizing, S for staffing, D for directing, Co for Co-ordination, R for reporting and B for budgeting.

Luther Gallic

Management is an activity to reach certain goals by efforts of Other’s

R Terry

Management is a process that requires the direction and guidance of a group of people to acquire organizational goals

Ricky W Griffin

Management is any task involving achieving goals with the help of four functions PLANNING, ORGANISING, LEADING & CONTROLLING

Widely Used

4 Functions of Management

4 functions of management

1st Function of Management – Planning

If you are up to any task to accomplish your aims; building a plan is the first basic step. Without any plan, you are going nowhere. Excellent planning skills are the first ultimate need for being a good manager.

Now if you are a manage an organization first thing that you are going to do is building a plan, for that, you should have the skills for eg which is your good employee at doing which specific task.

How and what amount of supplementary, staff and money are you going to use to attain your goals. Looking at your needs and availabilities you make a plan and then run this organization as per your plan.

Example

Alice the manager of a Mexican restaurant is working on how to make her restaurant successful she will hire the exact amount of staff that will be needed according to the area where she knows how much customers the restaurant will have and how much of supplementary will be needed so that no money & food goes to waste.

She goes to use different advertising media. Alice plans an event to provide food in cheap prices so that customers are attracted and with time they develop a good taste of Mexican food which helps the restaurant to run successfully in the new town.

2nd Function of Management – Organizing

Organizing in any field, Organization or institution is another main function of management. This field requires a manager who has excellent skills of organizing his staff, assigning employee duties, the provided extras, and resources.

Example

If the manager of an organization doesn’t know how many people he needs to staff for a particular task to be done he either hires less which makes the process of achieving goals slow or not being accomplished OR he hires more than necessary hence he wastes a huge amount of money.

If the manager in any restaurant doesn’t know what amount of groceries he needs according to how many customers he has per day. He will either buy too many groceries and waste both money and food Or buy less which will automatically result in a failure to satisfy customers.

3rd Function of Management Leading

You are on a task to manage a group of people to make them work and accomplish the goals as per your need. Money is not going to be the only required fuel.

The employees are the one who works for a person who pays them in return for tasks being completed. But now, here you are not making robots work as per instructions, you are using human resources for which your employees need the motivation to work.

A great deal for you, give you an outstanding result and make your organization succeed with their help by producing high-quality work.

For that, you need to be a great Leader. You are going to give motivation to your employees by providing them with a good environment & conditions to work more effectively, giving them good supervision, providing facilities i.e. health and housing facilities.

Gain confidence in them. So that, they don’t follow you because you pay them but they follow you voluntarily because they believe in you as the leader.

This is done by being a successful person who always makes the right decision, knows the pros and cons and how to keep away from failures.

4th Function of Management – Controlling

This part of management deals with monitoring and evaluating any activity. Any manager who is making an effort along with his team to achieve the goals of his organization, it’s a must for him to monitor the whole process and judge the quality of work done by the staff.

Personnel Management [ Functions, Importance, Objectives & Definitions ]

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Personnel Management focuses on the administrative tasks of the organization along with the employee’s welfare and labour relations management. It is often considered as a sub-category of Human Resource Management. Few consider it to be the same as HRM but it is different from it.

Personnel Management Definition by Different Authors

Edwin Flippo

Personnel Management is concerned with procurement, development, compensation, integration and maintenance of personnel of organization for the purpose of contributing towards the accomplishments of the organizational objectives.

Paul Pigore & Charles Myres

Personnel Management is the line responsibility & staff functions, assisting managers in providing advice, counsel, service and various types of controls to secure uniform administrations of personnel policies designed to achieve an organization’s objective.

Prof. Michael Jueins

Personnel Management is that field of management which has to do with planning, organizing and controlling various operative functions of procuring, developing, maintaining and utilizing a labour force in such a way that:

  • Objectives of the company are attained economically and effectively.
  • Objectives of all levels of personnel are served to the highest possible degree.
  • Objectives of the community are duly considered and served Anything HR Solutions

Martinez et. al, 1993:215

The efficient use of the material resources of any organization depends on how well it is utilized by its Personnel or Manpower.

Sison,1991:30

Personnel Management is concerned with promoting and enhancing the development of work effectiveness and advancement of the human resources in the organization through proper planning, organizing, directing, coordinating, and controlling of activities related to procurement, development, motivation, and compensation of employees to achieve the goals of the enterprise.

H.N. North Scott

Personnel management is an extension of general management that of promoting and stimulating every employee to make the fullest contribution to the purpose of the business.

Terry R George

Personnel management is concerned with the obtaining and maintaining of a satisfactory and satisfied workforce.

Spates,194 4:9

Code of the ways of organization and treating individual at work so that they will each get the greatest possible realization of their intrinsic abilities, thus attaining maximum efficiency for themselves and their group, and thereby giving to the enterprise of which they are a part its determining competitive advantage and its optimum result.

Webster, 1687

The phase of management concerned with the engagement and effective utilization of manpower to obtain optimum efficiency of human resources management functions.

Paul G. Hastings

Personnel Management is that aspect of management having as its goal the effective utilization of the labour resources of an organization.

Personnel Management

Functions and Objectives of Personnel Management

  • Conduct job analysis
  • Recruitment and Selection of employees
  • Performance appraisal systems of employees
  • Handling employee relations at the workplace
  • Employee Retention
  • To align the individual’s goals with the organization’s goals and objectives
  • To assure organizational compliance with governmental laws
  • Provision of the proper work environment and to ensure job satisfaction
  • To analyze Job security, avenues for promotion and internal and external compensation
  • To achieve a social objective like creating more employment opportunities, producing goods at the cheap rates and allocation of resources in useful ways
  • The orientation of new employees in an organization
  • To motivate the employees to do best on jobs
  • To communicate with all employees effectively
  • Role of Personnel Management is to play a role as Mediator between employees and management
  • To assist the top management in developing the strategic goals and objectives

Importance of Personnel Management

Employees are considered as an important asset of an organization, so the organization tries its best to retain them. In this modern era, many companies hire personnel managers as an essential part of their organization. Personnel management deals with transactional and administrative aspects of HR management. To understand the importance of Personnel Management considers the following:

Motivation

Personnel managers motivate employees to their job. They tried to motivate those employees who are not doing their job in a way as it should be doing. They carefully listen to their problems and solve their queries and issues. On the other hand, personnel managers motivate employees by offering them incentives, bonuses, perks, promotions, etc.

Competitive

Personnel managers train employees to stay up-to-date on their jobs because things are changing rapidly in this fast-paced era. So with the changing external environment organizations have to adopt a change to survive in the industry.

Hence, personnel managers conduct training sessions and seminars to train and to develop their employees. So that they can easily perform their jobs.

Competent Workforce

Personnel manager develops a competent workforce who can work with full devotion to achieve the mission and vision of the organization. He evaluates the performance of employees and finds out the best workers to create a competent workforce. The competent workforce also plays an important role to gain competitive advantage.

Managing People

Personnel managers manage not only the organized and disorganized workers in the organization, but individually manage the people in the organization. It manages all of the persons and departments like clerical staff, administration, top management, line managers, etc.

Human Relations

Personnel department concerned with the human relations in the organization. It stabilizes human relations through 7 Cs communication, supervision and leadership

What Happens In the Absence of Personnel Management

  • The turnover rate will be high
  • Wrong hiring process
  • Conflicts will be increased
  • Wrong compensation and benefits plans
  • Outdated structure
  • Unfair labour practices
  • Incompetent workforce
  • Demotivated employees
  • Unable to gain competitive advantage
  • Wrong performance appraisals systems
  • Organization’s goals and objectives couldn’t be achieved