What is the role of finance within a business?

Finance is at the heart of every business. The role of finance is to manage the organisation’s money so it can operate effectively, monitor cashflow, report on financial performance, and plan for long-term success. The finance department looks after the money coming in and going out, but its job also includes making sure the business stays compliant, financially healthy, and able to make sound decisions. But what does finance do and what are its main goals?

Whether you want to understand how finance supports a business, explore finance careers, or build your knowledge of business management, this article explains the main functions of finance in clear terms. It looks at core areas such as accounting, strategic financial management, payroll, and risk management, as well as the different finance job roles and the routes into the profession.

What does finance do?

Finance is responsible for managing the money within an organisation. This includes monitoring cashflow in and out of the organisation, reporting on the financial situation of the business and creating financial strategies to ensure the success of the company.

In large organisations, you can expect to find specialist finance teams with several different job roles and many layers of management. However, in a smaller business you might find that the business owner is responsible for finance, the role is outsourced, or one person has been hired to deal with everything related to finance.

Read on to learn more about the goals of the finance department, as well as the different types of jobs available in finance.

What is the main goal of finance?

There are two key goals within any finance department. The first is to accurately maintain records of financial transactions within the business, ensuring both legal compliance and accurate financial reporting to stakeholders.

The second is to create effective financial strategies that monitor the overall health of the business, guide decision making, and help determine how resources are allocated across the business and by individuals to support long-term success.

Let’s take a look at both of these roles in more detail.

Accounting and financial reporting

Accounting is at the heart of every finance department, with core finance operations covering day-to-day record keeping, reporting, payroll and cashflow reporting. This area of finance is responsible for what comes in and goes out of the business and will maintain the balance sheets and financial statements. It also tracks income and expenses to maintain accurate records.

This team is also responsible for ensuring that the business complies with regulations, supports accurate reporting, and remains in good financial health. This means managing and conducting internal audits, as well as filing tax reports.

Strategic financial management

Strategic financial management involves careful financial planning and budgeting to assess the overall health of the organisation and plan both short and long-term goals. This means using current reports to forecast the predicted growth and future trends of the business.

Not only does the strategic finance team create forecasts and budget plans, but they are also responsible for identifying and mitigating risks, ensuring that the business’ finances are protected by considering different finance options, shaping the funding strategy, supporting capital structure decisions, and liaising with investors and stakeholders where required. Effective cash flow planning helps businesses maintain sufficient liquidity.

Areas of finance

We have already discussed how finance can be broken into two main functions: accounting and strategic planning. However, these two functions can be further separated into many different areas of finance. Let’s take a look at some of the different areas of finance that you might come across.

Record keeping and reports

A large proportion of finance involves maintaining accurate records of transactions and financial events within a business. Not only are these records legally required by HMRC, but they’re also used by organisations to keep track of growth, as well as any money that is owed to investors or partners.

Accounts payable and accounts receivable

Another key role within the finance function is accounts payable and accounts receivable. Accounts payable is responsible for making payments to other companies for goods and services which have been received by the business. Accounts receivable are responsible for tracking money that comes into the organisation from clients, as well as sending invoices and reminders.

Accounts payable and receivable teams typically rely on technology, especially computer software, to manage these finance processes efficiently. At the end of every month or quarter, they will then go through a process known as balancing the books, where the transaction records are compared against the credits and debits in the business bank account.

Payroll

Most people will have heard of payroll – after all, it is one of the most important functions of a business. Payroll is responsible for ensuring that all employees within a business are paid accurately and on time. They will also ensure that taxes, national insurance, pension contributions and any other benefits are calculated accurately and paid on time to the relevant agencies.

Finance controls

The financial controller is responsible for ensuring that risk is managed effectively and all financial processes within a business are compliant with relevant legislation. They will also help to protect the business against fraud or theft by implementing internal controls to protect the business’ finances.

Financial planning and growth

For the best chances of success, every business needs clear plans on how to grow and develop. This is where the financial planning team comes in. They take reports from the accounting team and use market trends to support business decisions and allocate capital and resources toward profitable, efficient, and high-potential projects over time. This can help businesses to identify any potential risks to the business, as well as spot new opportunities that support innovation and long-term economic growth.

Risk management

Every business runs into issues occasionally, but it’s how those issues are identified and dealt with that will determine the ultimate success of the business. Risk management involves identifying and assessing potential risks that could impact a business, and then putting measures in place to mitigate those risks.

Risks could include internal changes within the organisation or external changes which could have an impact upon the business. By identifying these risks early, your business will have the best possible chance of reducing any negative impact to the business, as well as identifying any opportunities which arise from the changing business landscape.

Treasury

The treasury role within the finance function is responsible for looking after the organisation’s cash, savings and available funds, ensuring there is always enough money for the business to function effectively.

The treasury team works closely with other teams within the finance function to predict future financial needs and help support investment by ensuring funds can be directed where the business needs them most. This will enable the business to continue to operate effectively without the risk of running into debt. Effective treasury management also channels available savings into productive business activity.

Investor relations

Large corporations typically have multiple shareholders and investors, especially in an industry where external investors can have a significant influence on strategy. The investor relations role is responsible for liaising and communicating with investors and shareholders who have an active interest in the company’s finances and overall stability. Strong communication skills and stakeholder management are important when keeping investors informed. The investor relations team will be responsible for providing stakeholders with regular reports which detail the company’s performance, along with any upcoming organisational changes.

This role is also tasked with managing and nurturing the business’ relationship with its investors. This helps to ensure their ongoing investment and support in the company. Some businesses may also raise capital through venture capital or hedge funds.

Job roles in finance

Finance is a broad field with many career opportunities across sectors. We’ve already explored the different areas of finance, but what job roles exist within the field of finance?

Here are some of the most common job roles that you’ll find within finance.

CFO (Chief Financial Officer)

The CFO is the head of the finance department, overseeing the entire department. They act as a strategic partner to the wider business, with a strong focus on long-term value and overall responsibility for the organisation’s financial strategy. CFOs also use financial insight to guide decision making and drive business performance.

Financial Controller (FC)

The Financial Controller is the head of the accounting function within an organisation. This means that they will oversee financial analysis, reporting, budgets and wider operations tied to the immediate financial needs of the business. They are typically responsible for ensuring that the immediate financial needs of the business are able to be met, and that reporting is completed accurately and according to legal requirements.

Treasury Manager

The Treasury Manager has overall responsibility for the business’ funds. This includes identifying the best investment opportunities, overseeing investing activities such as banking and credit relationships, managing holdings in stocks where appropriate and minimising costs wherever possible.

Accounting Manager

The Accounting Manager has overall responsibility for the accounting and reporting activities of the business. They also oversee the day-to-day running of the business’ finances and the management of the company’s assets, including ensuring that transactions are recorded accurately.

Accountant

Accountants can have a wide range of responsibilities, including accounts payable or receivable, taxes, reporting, compliance and balance sheets. In small businesses, accountants may be required to work across many different areas. However, in larger organisations, accountants will often specialise in just one area, taking responsibility for a smaller area of the business’ accounting.

Financial Analyst

Financial Analysts use financial models and human judgement to guide decision making on projects and strategy, drawing on the analysis of a company’s financial data. They also assess investment decisions for long-term projects. This can help to support mergers, acquisitions, expansions and restructuring activities.

Budget Analyst

As the name may suggest, a Budget Analyst is responsible for analysing budgets and comparing them against targets to establish whether the budget has been effective in its aims. The Budget Analyst will look at the impact of company ventures against growth, as well as identifying development opportunities for the business.

How to get into finance

To secure a job in finance, you will usually need some formal qualifications. Two common routes into finance jobs are studying for a finance degree at university or undertaking an apprenticeship with a business.

A master’s degree in finance typically takes two years to complete.

The path that you will take will depend on the type of finance career you’re looking for, as well as your personal goals and preferences.

For example, if you’re looking for a career as an accountant, you’ll need to gain some specialist qualifications in accountancy. The minimum level typically expected for an accountant is the AAT qualification, but if you’re looking to become a chartered accountant and command the highest salaries, you’ll need to progress to the ACCA, ACA or CIMA qualifications. For some careers, the chartered financial analyst (CFA) is also a globally recognised credential.

Whatever job role you’re aiming for, it’s best to look at job posting boards such as Indeed or Monster to get an idea of the entry requirements for the roles you’re interested in securing. Entry requirements can vary by industry and role. Once you know what you need to secure your dream role, you will be able to start working towards it.

Related questions

Why should I study finance?

Finance is a broad area of employment that encompasses a wide variety of job roles. If you are blessed with an analytic mind and enjoy careful planning and logic, a career in finance might be ideal. Studying finance will prepare you for careers within the finance sector, opening doors to a vast array of career paths, whilst also benefiting your everyday life.

Does finance require a lot of maths?

As finance involves the management of money within a business, a strong foundation in maths is required. When studying and working in finance, you will also be developing analytical skills alongside maths ability, as you need to analyse financial performance and create in-depth financial strategies. If you don’t enjoy working with numbers, finance probably isn’t the right career path for you. Many roles also rely on communication skills, especially when presenting findings or working with clients and colleagues in a fast paced environment.

To sum up

Finance plays a critical role in business by managing a business’ cash flow. Within a business, finance departments have a wide range of responsibilities, including reporting on business finances, maintaining the payroll, filing for taxes and long-term strategic financial planning.

There are many different job roles available within the financial sector, from Budget Analysts and Accountants to Treasury Managers and Financial Controllers. There is no denying that finance is an interesting and varied business area that opens doors to many different career paths.

Beyond individual companies, finance also supports the wider public sector and economy by directing resources to productive sectors that boost GDP, helping funded businesses create jobs and stabilize employment rates, and enabling robust systems to absorb shocks during downturns.