Functions of the finance department: why it is so important

What is the finance department

The finance department is its own department with the function of dealing with a company's economic responsibilities. Likewise, its main function is to make the payments that the company itself is obliged to make, as well as the Management of expense and income items that it has. 

In this way, it can be understood that the finance department is fundamental, since every company's ultimate goal is create value that allows you to make a profit from your activity, which depends directly on the economic management carried out with its finances. 

Functions of the financial department

The functions of the finance department will be all those related to the economic situation of the company. In this way, although the Expense management and revenue is its main function, all of the following tasks also fall within this department's remit:

• Planning and budgetingBudgets are the documents that establish the relationship between a company's expenses and income, thus constituting the main document of the company's economic and financial situation. 
• Develop the financial organisation modelAnother function of the finance department is to create a financial model that will be applied within the company. In other words, this will be the economic model or prototype that will be used in the company's activities, and which will subsequently be reflected in the budgets.
• Wage paymentsAlthough it is considered part of expenditure management within the budget, payments must be made periodically and, in many cases, are not executed automatically, but rather carried out by the finance department.

• Managing employee activity expensesOn the other hand, it is the finance department that must manage the payments arising from the professional activity of its own employees during working hours. In this regard, using certain tools has benefits for employees and facilitates the management of this type of expense by the company itself. 
• Investment and financing managementAmong the functions of the finance department, one of the most important is finding new spaces in which to invest the profits obtained. Furthermore, in this same vein, it is also the responsibility of this department to manage the company's financing. In other words, where the necessary money will be obtained to continue with its activity. 
• Establish the role of the financial officerWithin the finance department, the financial manager is the person with ultimate authority. Their role is to keep accounts balanced, as well as to carry out the actions they deem necessary to maintain that balance. 
• Financial Problem ManagementFinally, another fundamental function of the finance department is to manage economic 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 how to be managed without its own department. In reality, all companies have to carry out finances 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.