Functions of the finance department: why it is so important
Table of contents
Broadly speaking, the finance department is the part of a company in charge of the company's finances. That is to say, of the economic responsibilities of the company itself. However, although in general terms the functions of the finance department deal with these responsibilities, its actions go far beyond this.
What is the financial department?
The financial department is a separate department whose function is to take care of the financial responsibilities of a company. Its main function is to make the payments to which the company itself is obliged, as well as the management of expenditure and revenue items that it has.
In this way, it can be understood that the financial department is fundamental, since the ultimate aim of every company is to create value that allows you to make a profit from your activity, This depends directly on the economic management of its finances.
Functions of the financial department
The functions of the financial department will be all those that have to do with the financial situation of the company. Thus, although theexpenditure management and income is its main function, In addition, all the following tasks also fall under this department:
Planning and budgetingBudgets are the documents that establish the relationship between the expenses and the income of the company's activity, and are therefore the main document of the company's economic and financial situation.
Develop the financial organisational modelAnother of the functions of the financial department is to draw up a financial model that will be applied in the company. In other words, this will be the economic model or prototype that will be applied to the company's activity, and which will subsequently be reflected in the budgets.
Payment of employees' salariesAlthough considered a part of expenditure management within the budget, payments have to be made on a regular basis and in many cases are not executed automatically, but are carried out by the finance department.
Management of expenses associated with employee activityOn the other hand, it is the finance department that must manage the payments derived from the professional activity of its own employees during working hours. In this sense, the use of certain tools has benefits for employees and facilitates the management of this type of expenditure by the company itself.
Investment and financial managementAmong the functions of the financial department, one of the most important is to find new areas in which to invest the profits obtained. In the same vein, it is also responsible for managing the financing of the company. In other words, where it will obtain the money it needs to continue its activity.
Establish the role of the financial officerFinancial manager: Within the finance department, the financial manager is the person with the highest authority. His or her role is to keep the accounts in balance and to take the actions he or she deems necessary to ensure that they remain balanced.
Management of financial problemsFinally, another key function of the finance department is to manage financial problems should they arise.
When is it necessary to have this department
A finance department is necessary as long as the financial volume of the company is too large to be managed without its own department. In reality, all companies have to carry out finance in order to maintain their activity. However, the functions of the finance department can be carried out by a single person when the company's activity is small. This is the case for many self-employed and SMEs, The Commission has also found that the Commission has a finance manager rather than a fully dedicated finance department.
