The corporate financial function performs the critical role of supporting management in decisions in an operational sense (short term loans: perspective within 12 months) and a strategic reason (medium / long time: outlook over 12 months). It deals with
In the context of planning, elaborated by the economic subject, he is a natural person who conditions strategic choices with competence, authority, and charisma. The strategic plan contains assessments on the political and economic context by top management, identifying general objectives of turnover, income, employment, and development. It coordinates the processes of horizontal and vertical integration, the spin-off of business branches, diversification.
In the strategic planning, again by top management and economic entity, the objectives to be pursued in the medium term are set with greater precision: the increase in market shares and profit for the year through dimensional growth.
In this context, the financial function is required by the right to carry out its duties, identifying the areas of investment and acquisition of loans. It is placed on the line in the management structure, participating in the definition of operational policies. The distinction between financial planning (top management in concert with finance) and implementation of decisions (delegated to the lower hierarchical level) is clear-cut.
The financial function, therefore, deals with the management and analysis of monetary flows, and is organized within the company (it is never delegated externally); in particular, it procures the capital necessary to acquire the production inputs and cover the financial requirements. It carries out a work of mediation between production (a function that generates outgoing cash flows) and marketing (incoming cash flows).
Financial management is represented by the manifestation of income (for example, dividends from equity investments) and charges (for instance, interest payable on bank loans) of this nature and supports typical management. It is framed in a short and medium-term technical horizon to optimize the use of fundraising.
The heads of the financial function are responsible for the best possible provision of financial resources. The manager or individual collegiate plays a role similar to that of the Minister of Finance. It contributes to top management to fix the valuation coefficients of the products sold. It then performs the same position to the Minister of the Treasury because he not only collects or contributes to receive the credit and collects payments but also evaluates and chooses the different employment proposals, i.e., provides to capital budgeting decisions role of top management. The CFO can try to demonstrate which projects should be funded or not. The head of the finance function cannot be held responsible for the investment plan, which is the prerogative of top management. The financial management performs a task of oversight of investment policies. Therefore, the managers’ primary functions are direct management tasks, treasury management, and detailed planning in a short time, managing the short-term business financial plan, financial control tasks, and various financial tasks of an atypical nature.
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