What Is The Role Of The Finance Department In A Business?

The finance department consists of many different roles, most of which are critical to any smooth running company.  Its main job is to provide the financing and accounting information which is needed to make various decisions.

The main areas in a finance department include:-

Book keeping - Years ago all financial transactions within a business were recorded by hand into thick books called ledgers.  Nowadays these records are usually kept on a computer.

Creating balance sheets and profit and loss accounts - At the end of each financial year, statements are required to be produced.  Trial balances are taken from the ledger entries and are used to create a balance Sheet which shows the assets and liabilities of the business at the year end.

Records of purchase and sales are also totalled up to create a Profit and Loss account.

Providing management information - On-going financial information is required by managers to enable them to make better decisions in regards to their business.  They are then able to decide if it is worthwhile to switch to making an alternative product.

Wages - This section is responsible for the payment of all wages and salaries of employees.  The wages section also organises collection of income tax and national insurance for the Inland Revenue.

Raising of finance - The finance department are also responsible for the way in which a company raises finance, for example through loans and what the repayment of interest is on that finance.  The finance department will also supervise the payment of dividends to shareholders
.

Preparation of budget, appropriation of accounts, re-appropriations, surrender and savings.  Control of expenditure and ways & means position.  Audit  Treasury administration  Administration of Taxes i.e. Sales Tax, Entertainment Tax, Luxury Tax and Entry Tax etc.  Service Conditions including Freedom Fighters Pensions.  Resource mobilization through loans, Institutional Finance, Small Savings, Credit and Investment and public debt.  Financial concurrence and advice.  Compilation of Codes, Rules and procedures concerning financial transactions and having bearing on State finance and their implementation.  Safety and investment of funds from consolidated funds, contingency fund and public account.  Contract, recovery and refund of revenue etc.

The finance dept. Handles the money coming in and going out of the business.

Important of finance

With the must-do’s taken care of, the finance department can now start to contribute to the management and improvement of the operations by measuring and reporting regularly on key numbers crucial to the success of the organization.  Management accounting information is information that managers can use to monitor the operations and decide where further attention may be required.  It will likely include some non-financial information and should be communicated to managers in a way that is easy to understand.  In smaller owner-managed businesses this resource, though extremely important, is often overlooked or ignored.

Finance is the heart of a business. Its functioning efficiently directly affects the rise and fall of a business. It is the source on which the entire edifice of a business rests. No finance - no business. Source it from anywhere before conceiving any business idea, its scale, its strategic budget, scope of expansion/ staying in the business.Finance department must control accounting system effectively and keep proving essential information to higher management about break even analysis, financial information over a particular period, interpretation of the ' financial' to enable the non-finance management team also follow it.

It is the finance department which advices the management what  share of the profit may be put in investment portfolio for acquisition, expansion, maintenance of the 'fixed capital', repayment of interest on borrowed capital, dividend to be paid to share holders, payment of salary and wages, bonus, other facilities, benefits to be passed on to the consumers.

Make sure money transactions are monitored in a business and gives advise on financial issues.

In church of money coming and going out of the business e.g expenditure revenue etc...