Financial Manager

The person responsible for planning and controlling the acquisition and distribution of a company’s financial assets. In recent years, CFOs have increasingly moved into CEO roles, reflecting how central financial judgment is to running an organization.

How It Appears Per Course

ADMN 201

The financial manager has four core responsibilities under the umbrella of finance (the business function involving decisions about long-term investments and obtaining the funds to pay for those investments):

1. Determining long-term investments — which projects, equipment, or expansions the firm should pursue
2. Obtaining funds — finding the best sources at the best cost (debt or equity)
3. Conducting everyday financial activities — cash-flow management
4. Managing risks — identifying and responding to threats that could harm the firm

Two Operational Areas

Cash-Flow Management

Ensuring the firm always has enough cash to meet its obligations on time. Financial managers track:

• Accounts payable — what the firm owes to suppliers
• Accounts receivable — what customers owe the firm
• Inventories — goods on hand (money tied up in unsold stock)

When revenues come in higher than expected, excess cash can go into short-term interest-bearing accounts or repay short-term debt. Lower-than-expected revenues may require short-term borrowing.

Financial Control

Checking actual financial performance against the financial plan to ensure desired results are being achieved. Budgets are the “measuring stick” — cash flows, debts, and assets for the whole company and each department are compared against budgeted amounts at regular intervals. Discrepancies signal the need for adjustments.

Financial Planning

A financial plan describes a firm’s strategy for reaching a future financial position — including projections for sources and uses of funds. Three questions every financial plan must answer:

• What funds are needed to meet immediate plans?
• When will the firm need more funds?
• Where can the firm get the funds to meet both short- and long-term needs?

graph TD
    A[Financial Manager] --> B[Cash-Flow Management]
    A --> C[Financial Control]
    A --> D[Long-Term Investment Decisions]
    A --> E[Risk Management]
    B --> F[Accounts Payable]
    B --> G[Accounts Receivable]
    B --> H[Inventories]
    C --> I[Budget vs Actual\nComparison]
    I --> J[Financial Adjustments]
    D --> K[Financial Plan\nSources & Uses of Funds]

(diagram saved)

Key Points for Exam/Study

• Finance has four responsibilities — memorize them
• Cash-flow management = day-to-day; financial control = comparing actuals to plan
• A financial plan answers: what funds, when, and where from
• CFOs are increasingly appointed as CEOs — their scope now includes leadership, not just numbers
• Budgets = the measuring stick for financial control
• Higher-than-expected revenue → deposit in short-term accounts or repay debt; lower → short-term borrowing

Cross-Course Connections

RiskManagement — one of the four core responsibilities
ShortTermFinancing — tools used in cash-flow management
LongTermFinancing — tools used in long-term investment decisions
MotivationTheories — financial incentives (bonuses, stock options) relate to motivation and organizational behaviour

Open Questions

• How does a financial manager balance the tension between keeping cash liquid vs. investing it for returns?