Challenges Faced by Financial Managers in a Changing Economic Environment
The basic responsibilities of the financial managers included financial planning, capital structure management, and financial planning. In the current business environment, the financial managers have to play different roles that will lead to companies being successful in the industry within which they operate. Some of the challenges that financial managers face include regulations, globalization, technology, financial risks, stakeholder management and reporting. These challenges have affected the financial managers and the function has expanded their roles. Companies have grown and expanded their operations which have added to the functions of the financial managers. The roles of different departments have also changed requiring their heads to apply new methods of making decisions and leading the employees. The changes in the economic environment have also resulted into complexities in the interaction which takes place between the economic players and the global economy.
The global business environment has also resulted in many uncertainties that have made different positions require implementation of strategies that will overcome turbulences resulting from the business environment. As a way of understanding how the finance function has adapted to changes in the economic environment, there is the need to understand how Chief Financial Officers, (CFOs) have implemented measures such as changing the structure of the financial department and mixing different skills from the team members. The global market presents many uncertainties which have new demands on the finance function. The financial managers have an uphill task of balancing between the good of a firm and what is important and best for an organization. Globalization has thus presented a challenge to the financial manager and their roles in a corporation.
Reporting In the past, most of the financial reporting done by financial managers used the financial statements prepared by accountants. Financial managers did not have to use information outside of what the accountants provided. Past reports were used in different departments to facilitate decision making in different departments. The financial managers also perform other functions such as divesting the business units and developing new models for business activities. The financial managers also re-engineer a company's supply chain to ensure that it aligns with the business financial goals. The roles of the financial managers have changed making them face challenges which require them to implement strategic plans for IT, develop insider threat policies and implementing them. The financial managers have expanded roles which require them to work with the IT function and provide input that will benefit the companies.
Transformation The finance function has continued evolving and the roles of the financial managers have also gone through the evolution process. The economic environment has turned to present complexities to companies (Johnsson, 2002). The financial managers have to identify the best policies that will harmonize the regulations across different borders. The CFO is also expected to cope with the regulations applied by different countries to ensure that business operations are successful. Stakeholder management The CFOs have to show their proficiency in financial leadership and work as a partner to the top level manager. The senior CFOs form part of a firm’s overall management in a company as they have to recommend strategies that will ensure all stakeholders achieve their needs and expectations from the corporations (Desai, 2008).
Through proper management of information, the CFOs will have a better chance of overcoming the challenges which they may face when performing their functions. The financial managers should also work towards expanding their roles to ensure that they remain fit in the transforming business operations. Conclusion The business environment is a whirlwind of uncertainties and businesses have faced different challenges. Technological advancements and foreign policies have contributed to globalization which has introduced challenges to the financial managers in different firms. The changes taking place in the role of financial managers have acted as a catalyst to business success. Desai, M. A. The finance function in a global corporation. Harvard Business Review. Retrieved from https://hbr. edu/ehost/pdfviewer/pdfviewer?sid=78572430-40ae-45bc-9fc5-c6f7ed85a111%40sessionmgr4006&vid=4&hid=4106 Hsieh, T.
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How critical the role of a financial manager is in the success of an institution is looked at. In the introduction, there is a mention of what economic changes in an environment means to the financial manager and to the whole organisation. The essay then looks at the business environment, how changes have been happening in the business environment and how much these changes affect the business organisation. In these there is a comparison of what has been happening in the business for a period of at least two decades, looking deeply at the impact caused by these changes while concentrating mainly on the economic aspect of the business environment. The essay main focus is the challenges that the business community faces and will face in future because of the changes that are happening in the business environment.
Therefore the more complex the situation is the more the complex the role of managers becomes in dealing with the situation hence the financial manager is informed by the particular changes that are happening in the business environment(Pelinescu & Elena,2015). Challenges faced by the financial manager According to the Association of Chartered certified accountants,2012 they Identified the following challenges like the one associated with the emerging modern business environment:Firstly the challenge of regulation as the more complex and uncertain the economic environment is becoming the more the speed of regulation is increasing and a higher need for harmonizing regulations across border is becoming. The financial managers, therefore, have additional roles of complying with these regulations. Financial managers also have to influence the policies and the regulations on behalf of the business.
Secondly, there is the challenge of globalization whereby as the businesses are becoming global the financial managers have to acquire global perspectives. 2011) Accurate record keeping in an organisation is another serious matter as the financial managers are supposed to ensure the information that is given within and outside the organisation is actual and accurate. The financial managers are faced with the challenge of marketing its prowess in the outside world. It is the work of the financial managers to ensure that the team of accountants have the analytical skills required to record proper transactions. The bookkeepers who are charged with the responsibility of crediting and debiting the accounts. While looking at the assets and the liabilities of an organisation. It is difficult to keep up with the increasing change that occurs in the organisation as a manager.
A financial manager for instance who started working twenty years ago would have a problem with the transition that occurs ranging from the use of technology, the paper filing systems and the modern way of doing business that is more demanding and requires to cut down the cost of operation while at the same time maximising the profits. Technology is the main cause of change in the business environment and every financial manager should be flexible enough to embrace technology while at the same time maintaining the skills that are needed to effectively lead a team. It is of importance to note that the financial managers have a big role to play for the success or failure of the organisation. The more effective a financial manager is in mobilising and accounting for the finances of an organisation the higher the probability of success of the organisation.
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