A company cannot function effectively if it does not have the necessary financial backing for it to carry out its activities. Without having a set of people who are dedicated towards ensuring that the company can undertake its tasks effectively, a company can easily turn into a lost cause. The finance team is thus that body of individuals who are responsible for ensuring that the company remains financially stable. It looks into gathering funds for the company, handing those funds and strategically planning the ways in which these funds are to be spent.
The most fundamental function of a finance team is to engage in bookkeeping. It is their responsibility to make note of the day-to-day financial transactions in a company, studying them and analyzing them for the company’s growth. They observe and track all kinds of expenses and purchases that are relevant to the company.
The finance team collaborates with the managers and the administrators of the company to prepare a budget for the company and to give financial forecasts. This data helps the administrators plan for the upcoming year and assess their staffing requirements, need for expansion, and their financial status.
REPORTING AND ANALYSIS
The raw data collected by the finance team needs to be transformed into meaningful data that can be understood by those it is relevant to. The team provides the management with a summary of all financial undertakings whose analysis is imperative to the success of the company. They also advise the administration about more efficient ways to ensure the financial stability of the company and make profit. The team also refers to past records about the financial situation of the company to analyze its progress and predict further growth.
ASSISTING MANAGEMENT IN MAKING KEY DECISIONS
The finance department also assists the administration in making important company decisions. The team has an important say in matters relating to potential investments or upcoming projects. A green signal from the finance department is a must for the company to go ahead and pursue desired projects as only the finance team can determine the feasibility of a particular project and the likelihood of its success.
Every company has to pay taxes, and the finance team is tasked with this duty of handling the tax payments of the company. It is extremely essential for the finance department to adhere to the policies and laws framed by the government and to execute task payments in accordance with them.
SOURCING LONG-TERM FINANCING
Apart from focusing on the day-to-day financial needs of the company, the finance team also examines potential sources for long-term financing of the company. This may be done through a bank or debt from a private lender. If the company wishes to attract venture capitalists, the finance department must take up the responsibility of preparing all the documents and data needed to put up a good presentation to potential sources of funding.