What Financial Managers Do
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.
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 find opportunities for expansion or for acquiring other companies
- 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 ideas as to how to maximize profits. They often work on teams, acting as business advisors 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 issues in healthcare finance. Moreover, financial managers must be aware of special tax laws and regulations that affect their industry. For more information on chief financial officers, see the profile on top executives.
The following are examples of types of financial managers:
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 not have enough cash and will need a loan or will have more cash than needed and so can invest some of its money.
Risk managers control financial risk by using hedging and other 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 due to 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 and costs imposed by a lawsuit against the company.
How to Become a Financial Manager
Financial managers typically have a bachelor’s degree and 5 years or more of experience in another business or financial occupation, such as loan officer, accountant, auditor, securities sales agent, or financial analyst.
A bachelor's degree in finance, accounting, economics, or business administration is often the minimum education needed for financial managers. 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.
Licenses, Certifications, and Registrations
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 possess at least a bachelor’s degree, have 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.
Work Experience in a Related Occupation
Financial managers usually have experience in another business or financial occupation, such as loan officer, accountant or auditor, 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.
Analytical skills. Financial managers increasingly are assisting executives in making decisions that affect their organization, a task for which these managers need 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 pay attention to detail.
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 must stay organized to do their jobs effectively.
Percent change in employment, projected 2012-22
- Total, all occupations
- Financial managers
- Management occupations
Employment of financial managers is projected to grow 9 percent from 2012 to 2022, 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, will continue to be 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. This will lead to demand for financial managers, as companies will be in need of cash management expertise.
Overall growth of employment for financial managers will be limited by slower expected growth in depository credit intermediation. This industry includes commercial banking and savings institutions, and employs a large percentage of these managers. From 2012 to 2022, employment of financial managers is projected to grow 5 percent in the depository credit intermediation industry.
As with other managerial occupations, jobseekers are likely to face competition because the number of job openings is expected to be fewer than the number of applicants. 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.
|Occupational Title||SOC Code||Employment, 2012||Projected Employment, 2022||Change, 2012-22||Employment by Industry|
SOURCE: U.S. Bureau of Labor Statistics, Employment Projections program
|Occupation||Description||Entry-Level Education||2012 Median Pay|
|Accountants and auditors||
A bachelor's degree in accounting or a relevant discipline is the usual path toward becoming an accountant or auditor. Some schools offer degree programs and training for a specific kind of accounting or auditing. Master's degrees are also an option for those looking to advance their careers, make themselves more attractive in the job market, or to hone their skills. Accountants and auditors may have to obtain continuing education over their career in order to qualify for licenses and certifications.
Budget analysts help public and private institutions organize their finances. They prepare budget reports and monitor institutional spending.'
|Financial analysts||Financial analysts provide guidance to businesses and individuals making investment decisions. They assess the performance of stocks, bonds, and other types of investments.'||Bachelor's degree||$76,950|
|Insurance sales agents||
Insurance sales agents help insurance companies generate new business by contacting potential customers and selling one or more types of insurance. Insurance sales agents explain various insurance policies and help clients choose plans that suit them.'
|High school diploma or equivalent||$48,150|
Insurance underwriters decide whether to provide insurance and under what terms. They evaluate insurance applications and determine coverage amounts and premiums.'
Loan officers evaluate, authorize, or recommend approval of loan applications for people and businesses.'
|Personal financial advisors||Personal financial advisors give financial advice to people. They help with investments, taxes, and insurance decisions.'||Bachelor's degree||$67,520|
|Real estate brokers and sales agents||
Real estate brokers and sales agents help clients buy, sell, and rent properties. Although brokers and agents do similar work, brokers are licensed to manage their own real estate businesses. Sales agents must work with a real estate broker.'
|High school diploma or equivalent||$41,990|
|Securities, commodities, and financial services sales agents||
Securities, commodities, and financial services sales agents connect buyers and sellers in financial markets. They sell securities to individuals, advise companies in search of investors, and conduct trades.'
Top executives devise strategies and policies to ensure that an organization meets its goals. They plan, direct, and coordinate operational activities of companies and organizations.'