ORGANISATION OF FINANCE FUNCTION.
The responsibilities for financial management are spread throughout the organisation in the sense that financial management is, to an extent, an integral part of the job for the .managers involved in planning, allocation of resources and control. For instance, the production manager (engineer) shapes the investment policy (proposal of a new plant) the marketing manager/analyst provides inputs in forecasting and planning the purchase manager influences the level of investment in inventories and the sales manager has a say in the determination of receivables policy. Nevertheless, financial management is highly specialized in nature and is handled by specialists. Financial decisions are of crucial importance. It is, therefore, essential to set up an efficient organisation for financial management functions.
Since finance is a major/critical functional area, the ultimate responsibility for carrying out financial management functions lies with the top management, that is, board of directors/managing director/chief executive or the cornerstone of the board. However, the exact nature of the organisation of the financial management function differs from firm to firm depending upon factors such as size of the firm, nature of its business type of financing operations, ability of financial officers and the financial philosophy, and so on. Similarly, the designation of the chief executive of the finance department also differs widely in case of different firms. In some cases, they are known as finance managers while in others as vice-president (finance), director (finance), and financial controller and so on. He reports directly to the top management. Various sections within the financial management area are headed by managers such as controller and treasurer.
Depicts the organisation of the financial management function in a large typical firm.
The job of the chief financial executive does not cover only routine aspects of finance and accounting. As a member of top management, he is closely associated with the formulation of policies as well as decision making. Under him are controllers and treasurers, although they may be known by different designations in different firms. The tasks of financial management and allied areas like accounting are distributed between these two key financial officers. Their functions are described below.