Characteristics and Competencies of a Financial Champion

The field of finance requires a strong set of structured competencies and disciplines.
Among many other critical skills to be discussed in this paper, financial leaders make sure financial records are accurate, data is available to understand the performance of the business, cash is available to run the business, and work is performed to make sure the business complies with regulatory requirements. While the nuances of the discipline vary somewhat by industry, the objectives are basically the same.

Finance, while it may be not the most glamorous function within a company, is one of the most critical. Considering the link between performance of the finance function and the success of a company, hiring of financial leaders are some of a company’s most important decisions.

In identifying a high quality financial leader, a hiring manager must consider four key factors:

o Business Acumen – Has the candidate exhibited a general business understanding and have specific accomplishments where they influenced the business in a positive way. Does the candidate have a sufficient level of experience required for the position? There is no substitute for experience. Unless you are willing to accept the learning curve, you don’t want to go short on experience of a candidate. Finally, does the business philosophy and personality of the candidate fit with that of the organization?

o Technical Skills – A candidate must possess specific skills relative to the financial position they are seeking. A Controller must possess knowledge of Generally Accepted Accounting Principles (GAAP). One indicator of that level of understanding is whether the candidate has earned their Certified Public Accountant (CPA) certificate. A candidate for the head of credit must be able to interpret customer financial statements in order to establish credit limits. Someone in charge of Sarbanes Oxley compliance must be knowledgeable of the requirements. Someone in Investor Relations or Financial Reporting must know the rules as it relates to reporting to the Securities and Exchange Commission, investment analysts, etc. Depending on the role, there can be specific technical requirements that are critical to the position.

o Analytical Skills – Financial analysis involves working with a significant amount of data. A financial leader must be able to determine what metrics are critical to the business, identify the critical components, or factors, that influence the business, interpret the financial results, and communicate the information in a manner that is understandable by nonfinancial associates. A finance department must be able to provide information needed by a company’s leadership team in order to make sound business decisions. This involves listening to the needs of the functional leaders, knowing what data is available, and deciding the best way to provide the data. A financial leader must be able to assess the reasonableness of forecasted data. Does forecasted data make sense given market conditions, trends, and the current economic environment?

o Timely and Accurate – A finance department must be able to report data timely and it must be accurate. The financial leader must take ownership for the accuracy of the financial information. This includes reviewing processes involved in compiling data and identifying opportunities to shorten those time limits so data can be available faster to the organization.

In today’s job market there are a lot of financial candidates that have a long track record of providing the above skills to their employers. However, a company should be looking for someone to be a Champion in their finance department. A financial Champion possesses all the above skills, but is also someone who will make the finance department a key business partner to the organization. A Champion is someone your business leaders will want to work with to get things done and help elevate their performance. This Champion will help give your company a competitive edge by raising the performance bar in their respective area, which will become contagious throughout the organization.

Basic Roles and Responsibilities of a Nonprofit Finance Committee

The Finance Committee is a standing committee of the Board of Directors and is typically chaired by the Board Treasurer. The committee is responsible for reviewing and providing guidance for the organization’s financial matters. Specifically, the committee assures internal controls, independent audit, and financial analysis for the organization.

The Finance Committee reviews all financial statements and reports on financial activity to the full board. The full board may be better able to respond to aggregated information with important financial trends and issues highlighted in an accompanying narrative report. While each board member should have the opportunity to review organization-wide income and expense reports to understand the impact on the organization, members who are inexperienced at reading financial statements may get lost in overly detailed statements. To help the board fulfill its oversight function, it is important for the Executive Director and the Finance Committee to present the information in as clear and concise a manner as possible.

Here are the Finance Committee’s basic responsibilities:

1. Provide direction for the entire Board for fiscal responsibility.
2. Regularly review the organization’s revenues and expenditures, balance sheet, investments and other matters related to its continued solvency.
3. Approve the annual budget and submit it to the full Board for approval.
4. Ensure the maintenance of an appropriate capital structure.
5. Oversee the maintenance of organizational-wide assets, including prudent management of organizational investments.

Here are some specific tasks the Finance Committee might undertake:

1. Review revenues and expenses at a monthly Committee meeting.
2. Ensure that organizational funds are spent appropriately (i.e., restricted funds).
3. Develop an investment strategy.
4. Ensure the preparation of an annual audit, tax form (990), and audited Financial Statements.
5. Provide support to staff as needed.

A committee of about 5 or 6 knowledgeable people should be able to provide invaluable financial leadership to your Board.

Functions of Business Finance

Strength and soundness of business depends on the availability of finance and competency with which it is used. The abundance of finance can do wonders and its scarcity can ruin even a well established business. Finance increases the strength and viability of business. It increases the resistance capacity of a business to face losses and economic depression. It is just like a lubricant, the more it is applied to the business, the quickly the business will move. Following headings explain the importance of finance to business:

(1) Initiating Business: Finance is the first and fore most requirement of every business. It is the starting point of every business, industrial project etc. Whether you start a sole proprietary concern, a partnership firm, a company or a charity institution, you need ample amount of finance. It is equally important for profit seeking and non-profit activities. It is equally important for a multinational organization and for a free dispensary.

(2) Purchase of Assets: Finance is needed to purchase all sorts of assets. Even if credit is available some down payment is to be made. Mostly finance is needed at the start of business for the purchase of fixed assets. These fixed assets consume a large amount of initial investment of the entrepreneur, so he may face liquidity difficulty in running day to day affairs of the business.

(3) Initial Losses: No business attains high profit on the first day of commencement. Some losses are normal before the business reaches its full capacity and generate enough revenue to match cost. Finance is necessary so that these initial losses can be sustained and business can be allowed to progress gradually.

(4) Professional Services: Certain business need services of specialized personnel. Such personnel have rich experience in specialized fields and they can provide useful guidance to make business profitable. Nevertheless these services are costly. Finance is always needed so that services of such professional consultants can be hired.

(5) Development: Business is always exposed to change. New innovations and emergence of new technologies replaces old techniques out of market. So in order to remain in the market, it is needed to keep the business well equipped with all emerging tools and techniques. This required finance. New technology is always expensive as it is better than others. So finance is needed to purchase new equipment and keep the business running.

(6) Information Technology: Information technology has now changed the geography of the business battle field. The home markets have now extended virtually to other comers of the world. The whole world can be your customer or competitor. To face such a fierce competition, IT is needed. Skills and competency in IT can perform miracles. But finance is again the decisive factor. It is very much needed to incorporate expensive IT products in the business.

(7) Media War: The advertisement and promotion have now become a vital elements for the success of business. The way a businessman approaches a customer and convinces him to purchase his product has become more important than the quality of product. With advertisement on International media, a businessman can reach the minds of millions of people around the globe. However, advertisement is a luxury which every business can’t afford. Huge finance is required to meet advertisement expenses.

(8) Resource Management: Finance is very essential for efficient resource management. Resources here include capital and human resources. Maintenance of plant and equipment and training of employees all need finance. Establishment of new industrial units, expansion of plant capacity, hiring of well learned skilful laborers – all
these factors can lead to huge revenue but at the first place they need finance to start with.

(9) Stock Investments: These investments are those which are made to hold ample stock of raw materials in hand. Bulk purchase of raw materials is profitable in a sense that purchase discount can be attained and there is no danger of production halts. So companies most often hold huge amount of stocks and raw materials. But such an investment can be made only if a company has sufficient capital or finance to carry out its daily operation easily besides holding huge stock.