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Future Scope of Financial Management as Career Option in 2021

Introduction To Financial Management

Financial management is the highly specialised wing of management that focuses on efficient financial planning for an organisation. Unlike the traditional approach that was merely restricted to fundraising, in the modern corporate world, the finance department is responsible for the organisation, strategic planning, direction, and control of financial undertakings in a company or an enterprise. It also includes fiscal management and coining the management principles for an organisation’s financial assets. 

With the help of ERP software and finance management system with functions such as accounting information system, asset management, and revenue recognition, financial management empowers the company with a long-term insight. This business insight helps in crucial decision-making on matters pertaining to investment, profitability, liquidity, and business expansion.

Financial managers are highly insightful and experienced corporate finance experts who maintain the financial health of an organisation. This is achieved by generating financial reports, planning and tracking investments, developing financial strategies, and designing short and long-term financial goals. 

Importance of Financial Management

For a sound fiscal execution in a company or an organisation, financial management plays a vital role. From strategising the capital structure, capital budgeting, dividend structure, and scenario planning to crucial decision making such as mergers, acquisitions, franchising, and business expansion – financial management is the backbone that manages the fundamental resource, i.e., Capital.

Finance management also oversees budget allocation to each department and leads the way for the entire organisation to meet the short and long-term financial goals. 

Nature of Financial Management 

Financial Management demands core concentration on wealth maximisation, applying financial management principles to manage the company’s financial resources or the organisation. 

Financial Management has a centralised and interdisciplinary nature with controllership function. It is the mainstay of commerce and industry as it essentially involves a risk-return trade-off. Risk management is also one of the vital functions of financial management. 

The Nature of Financial Management can be explained as

1. Capital Requirement Estimation

Anticipating fund requirements can be one of the most crucial aspects of financial management. Specialised finance managers estimate the capital requirement for a company or a project and prepare the budget considering all revenues and expenses. Accurate cost estimates are essential for the survival and success of a project or a company.

2. Capital Structuring

Optimal capital structure needs crucial decision-making about securities subdivisional proportion and combination of equity and debt. The right balance between debt securities, equity securities, derivative, and hybrid securities reduces the cost of capital.

3. Funding Source Selection

When it comes to choosing the source of funds, financial management again plays a vital role in determining the suitable sources, including owner investment, issuing of shares, bonds and debentures, venture capital, retained income, etc. The principle behind choosing the funding source mainly sticks to capital cost reduction, low-risk involvement, and accessibility.

4. Raising Shareholder Value

To raise the overall value of shareholders, financial management works on cost reduction and profit maximisation to increase return on investment to shareholders. Finance management focuses on not only fundraising but also fund investments on behalf of the company they work for, not only for the company’s benefits but also for the shareholders who have invested in their company.

5. Cash Management

The entire cash inflows and outflows are tracked, monitored, and supervised by financial management. This balances the cash surplus and deficit for the benefit and financial security of an organisation. Cost overrun is one of the primary causes of project failure, and financial management effectively maintains sufficient cash flow and reduces liabilities to meet the short and long-term financial goals and obligations.

Scope of Financial Management

To understand the scope of financial management, these below mentioned factors are the crucial decisions taken by the financial management. It is applicable in finance and non-finance institutes, stock market, ministry, corporate houses, etc.  

1. Investment Decisions

Financial managers are responsible for choosing the right set of investments for an organisation. Short-term investment decisions are related to funds allocation in current assets in the short run. Investment decisions in the long-term are investment proposal selection based on various financial factors and is often referred to as Capital Budgeting.

2. Financing Decisions

Another crucial decision that comes under the scope of Financial Management is the financing decision. Finance management is responsible for raising the capital for the company. Right from designing the company’s capital structure and choosing the funding source to accomplish the process, the financial manager takes the company’s financing decisions. 

3. Liquidity Decisions

When it comes to profitability and access to capital, financial management ensures that the company’s assets and securities remain liquid, i.e., accessible to the management as and when required. Finance managers ensure effective management of current asset investment and protect the company against illiquidity risks. 

4. Dividend Decisions

The financial manager decides the profit distribution policy for the company. Whether the company chooses to distribute the profit among shareholders in the form of dividends or focuses on profit retention, financial management plays a pivotal decision-making role. 

Responsibilities of Financial Managers

Financial managers work for building and maintaining the financial health of an organisation. Typically, a finance manager is responsible for maintaining and supervising financial reports, budgeting and statements, generating activity reports, and produce business forecasts. Along with monitoring the organisation’s financial details, revenue recognition, and cost reduction, the financial manager also looks after the legal requisites of each business activity. 

Playing an active role in critical decision making, finance managers help the management with data analysis to maximise profit, minimise cost, explore expansion opportunities and meet the financial goals within the desired timeframe. 

Having a stronghold on tax regulation, GST, and special tax laws (for certain sectors and regions), the financial manager maintains compliance with tax regulations and laws pertaining to the industry or sector they work in. Apart from taxation and excise, they also provide support during internal audits. The roles and responsibilities of a financial manager are sometimes altered to suit the requirements of their organisation in a particular sector.  

A Career in Financial Management

The financial management domain offers a range of career opportunities and has a vast scope for skilled professionals to occupy multifaceted corporate finance positions in different sectors.

Companies, organisations, and governments hire passionate corporate finance professionals for internal operations of all financial management departments for profit maximisation, efficient budgeting, and cost reduction. From investor relations associates and investment analysts to financial auditors and finance managers, there are endless job opportunities in financial management with a great future.

Banks, finance companies, brokerage, and insurance companies hire investment analysts and finance managers, auditors, and associates. Organisations in the Non-finance sectors such as Technology, Healthcare, Retail, Energy, Real Estate, and Industrials also provide lucrative job opportunities for corporate finance professionals. 

The Salary Range for a Finance Professional

The increasing demand for financial managers showcases an upward trend and positive outlook towards a career in this domain. Erratic financial challenges such as cash crunch, illiquidity, regulatory reforms, etc., faced by companies in various sectors and industries have boosted the demand for financial managers who specialise in fund management, risk management, and capital structuring. 

The median annual wage for financial managers in India is ₹994667, but the salary varies based on various parameters such as credentials, experience, industry, position, and location. The salary of a finance manager is usually higher in finance sectors compared to non-finance sectors. According to PayScale, professionals with advanced finance degrees, particularly MBA Finance, earn better than finance graduates. 

Source: Payscale

How to Become an expert Financial Manager?

Financial managers typically need a bachelor’s degree in finance and extensive experience in a financial occupation. Although bright finance graduates can get a job in financial management, to get a lucrative job opportunity at the managerial level and build a steady career in corporate finance, you need a master’s degree in finance, economics, or business management from a reputed institute.

Several certificate courses and advanced diploma courses combined with relevant professional experience can also help a candidate build a stable career in financial management. 

Institutions in India conduct various financial management courses. Since the contents of a course and curriculum can differ significantly between different institutions, choosing the right institute for your advanced education to establish a rewarding career in financial management is crucial. Below mentioned are some MBA courses that can help a candidate pursue a successful career in financial management. 

1. MBA Degree from Liverpool Business School with Specialization in Finance

Give your finance career a head start with an MBA Degree from Liverpool Business School. This MBA program covers Working Capital Management, Accounting Statement, Enterprise and Risk Management, Marketing Management, and Project Evaluation. These subjects will open career prospects for you to work as Financial Analyst, Investment Banker, Finance Manager, Finance Controller, Auditor, and Corporate Finance Manager.

Suitable for working professionals, entrepreneurs, and business owners who are planning to give their career a boost, this MBA degree gives you a chance to become a part of the global alumni network of Liverpool Business School, which is UK’s one of the Top B-School. 

2. MBA (Global) with Specialisation in Digital Marketing

Advance your career with MBA Degree from Deakin Business School (DBS) – Australia’s top B-School. This MBA program specialises in Digital Marketing and covers subjects like SEO, SEM, Content Marketing, Social Media, Branding, Business Growth Strategies, Marketing Analytics, Design Thinking, Strategic Thinking, and Integrated Business Strategy Formulation. 

For working professionals planning to upgrade to Digital Marketing, this course is a great opportunity. Bag dual credentials from Deakin University and MICA and unlock job opportunities in Management Consulting, Operations, Business Development, Marketing, Finance, and HR Management. 

3. MBA from Liverpool Business School with Specialization in HR

MBA Degree in HR from a top-UK school, Liverpool Business School, enriches the candidates with marketing skills through top subjects like Human Resource Management, Organizational Behaviour, Workforce Planning and Recruitment, Market Research, Employee Engagement, and Retention, Business Communication, Accounting, Finance, HR and much more.

Working professionals with 1-5 years of full-time work experience can pursue this MBA in HR to unlock potential job opportunities, including Human Resource Management, Talent Acquisition, Employee Training, Retention, and Engagement. 

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