What qualifications are needed to be a finance manager?
A finance manager is responsible for the day-to-day as well as the strategic management of a company’s financial resources. Additionally, a finance manager also has the responsibility to ensure that the company operates within budgets and that all departments receive adequate revenue targets. Finally, a finance manager also serves as the main conduit for information to flow from the various departments to the decision-makers.
Finance managers thus must wear multiple hats. Firstly, they must be able to understand, transform and present data. Secondly, they need to be able to understand the company’s core business enough so that they can make predictions and forecasts and work with budgets. Lastly, they need to be masters at financial management and risk mitigation.
Finance managers are ideally expected to have a degree in finance, business or accounting. These degrees are mathematically focused and cover a lot of concepts that finance managers must deal with in their day-to-day operations. In addition to these degrees, others which also have a similar mathematical focus might also work. Economics would be a good example and even formal accounting certifications work well.
These courses should be enough for general finance managers. However, large companies would have specialised roles within the finance department. For example, there might be a finance manager who must handle only the company’s receivables and payables. While there might be another finance manager who must work on the reporting aspect. And there might be yet another finance manager managing capital expenditures. In such cases, it is possible to enrol in specialised courses which cover various specialisations within the broader world of finance. Some examples would be a master’s in financial engineering or a master’s in financial management etc.
There is a number of well-recognised certifications available to finance managers.
Accounting certifications – The curriculum of most accounting certifications covers the basic technical skill requirements for finance department positions. These certifications are usually not mandatory for finance managers but do help, nonetheless.
Risk management certifications – Over the last decade, there has been an increasing focus on financial risk management. The Financial Risk Management certification is usually considered the gold standard here.
Financial management certifications – There are several certifications offered in corporate finance, financial engineering, credit management and other specific focus areas within finance. Which of these courses ought to be pursued depends upon the career preferences of the candidate?
Those looking to build a career in finance can start at the basic level without much experience. While at the same time roles in the finance department can go as high up as the Chief Financial Officer’s position. This means that there is usually a role available for almost anyone at any level of experience.
Financial management is also a role where academic knowledge can prove to be quite helpful and useful. This does not mean that on-the-job work experience isn’t appreciated or valued, it just means that a lot of the work that finance managers must do can be taught in the classroom as well. This is usually a good thing as it allows fresh graduates to directly start their careers in finance without struggling to get a lot of experience under their belts.
Finance offers a lot of internship opportunities as well. Almost every company with more than a handful of employees would have someone working on financial management. This means that college students looking to get some internship opportunities in finance should usually be able to find one.
Large companies also have sizeable finance departments with multiple internship opportunities. Interns are usually expected to help the full-time employees in their roles by doing some basic data manipulation or other supporting tasks.
What skills do finance manager need?
Number crunching/ Analysis
Finance managers are expected to spend most of their time dealing with numbers. They work on raw data which is mostly related to finance and other performance-related figures. They must compile, analyse, decipher and disseminate this data to all relevant stakeholders.
Finance managers have access to a variety of specialised software to aid in the performance of their duties. From commonly available software like Microsoft Excel to purpose-built multi-million-dollar software packages, finance managers have a lot of options available to them.
Finance managers need to possess a very high level of numeracy to perform their jobs effectively and with a high degree of accuracy. In most cases, the actual mathematical principles are not very complicated with the sheer volume of variables and data that needs to be handled adds to the complexity. Being able to find the easiest and most resource-efficient way to transform raw data into useful information is an important skill set.
Communication and presentation skills
Most of the reports that finance managers prepare are made for the consumption of other departmental heads, top management or executives. Therefore, this information needs to be presented in a manner and form that is easily deciphered and digested by the recipients. This not only means that data must be presented in a visually appealing way using charts, graphs and so on but it also means that the right data must be presented. For example, picking a data point that accurately captures the daily progress of a major project can change the way management perceives its progress.
Working with uncertainty
Finance managers not only have two work with existing data but they often also must work on projections and estimates. A large part of their job responsibility includes budgeting and forecasting. This requires them to make predictions and estimates which can be a very challenging task indeed. The usefulness of the reports prepared by them thus depends on their ability to accurately make these predictions. Here are some examples of the sort of predictions that they might have to make – estimating the demand growth for the future, interest rate movements, predicting average raw material prices and so on.
Risk management skills
An integral part of a finance manager’s job is to identify, quantify and mitigate all sorts of risks faced by the business. These might include credit risks, market risks, interest rate risks, liquidity risks, cash flow mismatches, adverse currency movements, fluctuation in commodity prices and so on.
Finance managers must spend a great deal of time to manage and mitigate these risks. They, of course, have access to several tools to help them mitigate these risks. For example, entering into futures contracts for the purchase of certain commodities or securing backup credit lines and so on. Therefore, finance managers need to possess a broad range of skills and a deep understanding of the various risks that our business faces.
While the role of a finance manager is generally not to generate sales, they still have a role to play in making the company’s overall business more commercially viable. They do so by working on budgets and departmental/ product revenue targets. They can also directly help a company’s bottom line by negotiating better deals with banks or other service providers. Finally, they can also contribute by maximising the return on equity using several financial tools and strategies.
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