A finance department is the lifeblood of a business. Often led by a chief finance officer, this department typically focuses on providing accurate financial information, promoting innovation, mitigating business risks, enhancing transparency and identifying business opportunities. Most workers in this section typically have a degree in finance or accounting and a certified public accountant certification.
Senior managers need to understand the financial implications of every boardroom decision. For example, if a company wants to buy an existing business to diversify operations, the finance department must provide sufficient information to help managers make a sound decision. The department may analyze the financial outcomes of companies that have made similar acquisitions and assess the cost and value of acquiring the firm to determine likely financial effects of the changes that may occur. If necessary, finance officials may prepare pie charts and drawings to help managers understand complex financial information.
A finance department that concentrates on establishing and maintaining strategic relationships can help a business gain a competitive advantage in a marketplace. Given that the finance department handles a company’s funds, the CFO may, for instance, work toward maintaining positive working relationships with banks. During a financial crisis, the company can have access to greater credit facilities from these banks. A finance department can also establish relationships with insurance provided to enhance the company’s chances of buying insurance policies at discounted prices.
Because various federal and state laws regulate businesses in the U.S., the finance department must maintain compliance to avoid inspections from external auditors. For example, a hospital’s finance department must ensure compliance with the Affordable Care Act, which requires health care facilities to establish written financial assistance and emergency medical care policies. To do this, the CFO or department head can collaborate with legal experts, internal auditors and senior managers to help the organization formulate appropriate guidelines. An effective finance department monitors changes in relevant laws and regulations to enhance adherence.
Employees working in the finance department must work as a team. When staff members quit or have low morale due to unfavorable working conditions, the stability of the department can take a dive. Finance departments should focus on creating a workplace environment that facilitates sharing of ideas by, for instance, involving all workers when developing overall objectives. You also can create sections such as compliance, accounting and risk management within the departments so each staff member understands her role.
- William Paterson University: Department of Economics, Finance and Global Business
- U.S. Small Business Administration: Buying Existing Businesses
- Ivey Business Journal: The Five Factors of a Strategic Alliance
- Internal Revenue Service: New Requirements for 501(c)(3) Hospitals Under the Affordable Care Act
- Bridgespan Group: Designing an Effective Organization Structure
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