Career Girls

Overview:

Financial managers are responsible for the financial health of an organization. They produce financial reports, direct investment activities, and develop strategies and plans for the long-term financial goals of their organization.

They work in many places, including banks and insurance companies. They work closely with top executives and with departments that develop the data that financial managers need. Most financial managers work full-time, and many work long hours. 

Financial managers typically do the following:

• Prepare financial statements, business activity reports, and forecasts
• Monitor financial details to ensure that legal requirements are met
• Supervise employees who do financial reporting and budgeting
• Review company financial reports and seek ways to reduce costs
• Analyze market trends to maximize profits and find expansion opportunities
• Help management make financial decisions

The role of the financial manager, particularly in business, is changing in response to technological advances that have substantially reduced the amount of time it takes to produce financial reports. Financial managers’ main responsibility used to be monitoring a company’s finances, but they now do more data analysis and advise senior managers on ways to maximize profits. They often work on teams, acting as business advisers to top executives.

Financial managers also do tasks that are specific to their organization or industry. For example, government financial managers must be experts on government appropriations and budgeting processes, and healthcare financial managers must know about topics in healthcare finance. Moreover, financial managers must be knowledgeable about special tax laws and regulations that affect their industry.

The following are examples of types of financial managers:

Chief financial officers (CFOs) are accountable for the accuracy of a company’s or organization’s financial reporting, especially among publicly traded companies. As head of a company’s entire financial department, they manage the lower level financial managers. They oversee the company’s financial goals, objectives, and budgets.

Controllers direct the preparation of financial reports that summarize and forecast the organization’s financial position, such as income statements, balance sheets, and analyses of future earnings or expenses. Controllers also are in charge of preparing special reports required by governmental agencies that regulate businesses. Often, controllers oversee the accounting, audit, and budget departments of their organization.

Treasurers and finance officers direct their organization’s budgets to meet its financial goals. They oversee the investment of funds and carry out strategies to raise capital (such as issuing stocks or bonds) to support the firm’s expansion. They also develop financial plans for mergers (two companies joining together) and acquisitions (one company buying another).

Credit managers oversee their firm’s credit business. They set credit-rating criteria, determine credit ceilings, and monitor the collections of past-due accounts.

Cash managers monitor and control the flow of cash that comes in and goes out of the company to meet the company’s business and investment needs. For example, they must project cash flow (amounts coming in and going out) to determine whether the company will have a shortage or surplus of cash.

Risk managers control financial risk by using strategies to limit or offset the probability of a financial loss or a company’s exposure to financial uncertainty. Among the risks they try to limit are those that stem from currency or commodity price changes.

Insurance managers decide how best to limit a company’s losses by obtaining insurance against risks, such as the need to make disability payments for an employee who gets hurt on the job or the costs imposed by a lawsuit against the company.

Work Environment:

Financial managers held about 555,900 jobs in 2014.

Financial managers work closely with top executives and with departments that develop the data financial managers need.

Most financial managers work full-time, and about 1 in 3 worked more than 40 hours per week in 2014.

Education and Training:

Financial managers typically have a bachelor’s degree in finance, accounting, economics, or business administration and 5 years or more of experience in another business or financial occupation, such as an accountant, securities sales agent, or financial analyst.

However, many employers now seek candidates with a master’s degree, preferably in business administration, finance, or economics. These academic programs help students develop analytical skills and learn financial analysis methods and software.

Professional certification is not required, but some financial managers still get it to demonstrate a level of competence. The CFA Institute confers the Chartered Financial Analyst (CFA) certification to investment professionals who have at least a bachelor’s degree, 4 years of work experience, and pass three exams. The Association for Financial Professionals confers the Certified Treasury Professional credential to those who pass an exam and have a minimum of 2 years of relevant experience.

Financial managers usually have experience in another business or financial occupation. For example, they may have worked as a loan officer, accountant, securities sales agent, or financial analyst.

In some cases, companies provide formal management training programs to help prepare highly motivated and skilled financial workers to become financial managers.

Skills to Develop:

Analytical skills: Financial managers increasingly are assisting executives in making decisions that affect their organization, a task which requires analytical ability.

Communication skills: Excellent communication skills are essential because financial managers must explain and justify complex financial transactions.

Detail-oriented: In preparing and analyzing reports such as balance sheets and income statements, financial managers must be precise and attentive to their work in order to avoid errors.

Math skills: Financial managers must be skilled in math, including algebra. An understanding of international finance and complex financial documents also is important.

Organizational skills: Financial managers deal with a range of information and documents and so they must stay organized to do their jobs effectively.

Job Outlook:

Employment of financial managers is projected to grow 7 percent from 2014 to 2024, about as fast as the average for all occupations. However, growth will vary by industry.

Services provided by financial managers, such as planning, directing, and coordinating investments, are likely to stay in demand as the economy grows. The United States remains an international financial center, meaning that the economic growth of countries around the world will likely contribute to employment growth in the U.S. financial industry. In recent years, companies have been accumulating more cash on their balance sheets, particularly among those with operations in foreign countries. As globalization continues, this trend is likely to persist. This should lead to demand for financial managers, as companies will be in need of cash management expertise.

The depository credit intermediation industry, which includes commercial banking and savings institutions, employs a large percentage of financial managers. As bank customers increasingly conduct transactions online, the number of bank branches is expected to decline, which should limit employment growth in this sector. However, employment declines here are expected to mainly affect clerical occupations, such as tellers, rather than financial managers. From 2014 to 2024, employment of financial managers is projected to grow 6 percent in this industry.

As with other managerial occupations, job seekers are likely to face competition because there are more applicants than job openings. Candidates with expertise in accounting and finance—particularly those with a master's degree or certification—should enjoy the best job prospects. An understanding of international finance and complex financial documents is important.

Earnings:

The median annual wage for financial managers was $121,750 in May 2016. The median wage is the wage at which half the workers in an occupation earned more than that amount and half earned less. The lowest 10 percent earned less than $65,000, and the highest 10 percent earned more than $208,000.