Table of Contents
Financial Department Definition
The financial department is the part of a company in charge of the company’s finances. That is, of the economic responsibilities of the company itself. However, while finance department functions generally handle these responsibilities, their actions go far beyond just this.
What is the Finance Department?
The financial department is its department that has the function of dealing with the economic responsibilities of a company. But, likewise, its central part is to make the payments to which the company itself is obliged and manage the items of expenses and income that it has.
In this way, it can be understood that the financial department is fundamental since every company has the ultimate goal of creating value that allows it to obtain benefits with its activity, which depends directly on the economic management that is carried out with its finances.
Functions of the Financial Department
The functions of the financial department will be all those that have to do with the economic situation of the same. This way, although the management of expenses and income is its primary function.
All the Following Tasks Also Fall on this Department:
Planning and Preparation of Budgets
The budgets are the documents that establish the relationship between the expenses and the income of the company’s activity. Therefore, they constitute the main document of the economic and financial situation of the company.
Develop the Financial Organization Model
Another function of the financial department is to develop a financial model applied in the company. That is to say, this will be the economic model or prototype that will be use in the company’s activity, and that will be the one that will be reflecte later in the budgets.
Workers’ Payroll Payments
Although it is considered a part of spending management within the budget, payments must be made periodically, and, in many cases, they are not execute automatically. Still, it is the financial department that carries it out.
What is a Financial Controller, and What are its Functions?
Management of expenses associated with the activity of employees: On the other hand, the financial department must manage the payments derived from the professional training of its employees during working hours. In this sense, helping yourself with specific tools such as Corporate has benefits for employees and facilitates the management of this type of expense by the company itself.
Investment and Financing Management
Among the functions of the financial department, one of the most important is to find new spaces where the profits obtained can be investe. In addition, in this same sense, this department is also responsible for managing the company’s financing. Therefore, where will you get the necessary money to continue your activity.
Establish the Role of the Financial Officer
The financial officer is the person with the highest authority within the financial department. His function is to keep the accounts balanced and carry out the actions. That he considers necessary to keep them balanced.
Management of Financial Problems
Finally, another of the fundamental functions of the financial department is to manage economic problems if they occur.
When is it Necessary to Have this Department?
A financial department is necessary as long as the economic volume of the company is too large to be manage without its department. In reality, all companies have to carry out finances to maintain their activity. However, the functions of the financial department can be carried out by a single person when the company’s activity is negligible. It is the case of many freelancers and SMEs who have a finance manager. Instead of a department entirely dedicated to this activity.
Examples of Department of Finance
The use of the term can be appreciate in the following way in the following examples:
The payment order is the sign by the supervisor of the finance department, who is reviewing the physical supports that show the service provided.
The finance department is the one that can certify a credit in favour of the supplier to carry out the established plan.
Conclusion
The finance department’s role goes beyond just bookkeeping. It also involves data analysis to provide insights for decisions that impact the future. As a result, the finance department must be able to scrutinize any decisions taken by the senior management. Analyze its efficiency, and assess the risks involved.
Also Read: Technical Information on State Trading Enterprises