They work with the firm’s other department managers to determine how available funds will be used and how much money is needed. Financial managers must track how money is flowing into and out of the firm (see (Figure)). But money from sales doesn’t always come in when it’s needed to pay the bills. Revenues from sales of the firm’s products should be the chief source of funding. The head of the IT department will need to justify any requests for new computer systems or employee laptops. If you are a sales representative, for example, the company’s credit and collection policies will affect your ability to make sales. Managers in all departments must work closely with financial personnel. All business decisions have financial consequences. It may not be as visible as marketing or production, but management of a firm’s finances is just as much a key to the firm’s success.įinancial management-the art and science of managing a firm’s money so that it can meet its goals-is not just the responsibility of the finance department.
Therefore, finance is critical to the success of all companies. To make money, it must first spend money-on inventory and supplies, equipment and facilities, and employee wages and salaries. How do finance and the financial manager affect the firm’s overall strategy?Īny company, whether it’s a small-town bakery or General Motors, needs money to operate.
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