Who serves as financial manager at your company? Quite often this question is equally responsible entrepreneurs: people, a former chief accountant. In fact, many companies, particularly those actively developing, faced with the necessity of having a financial manager, went one way: promoted to chief accountants. And faced with a problem: the head is still not getting the full information required by the financial manager and the latter completely overloaded. Besides constantly in a stressful situation, because it can not provide the head of what was expected of him. The problem arises mainly due to the lack of understanding of differences between entrepreneurs accounting and financial management. In fact, their work is closely related, but nevertheless - it's completely different functions, and execute them have completely different people.
A little history
By the way, branching and increase the scale of the financial management functions occur naturally by following the development of the economy. So, up to 20 years of XX century in the West as the financial manager or director as such did not exist. Worked financial and economic departments dealing with all the related finance matters. Allocation of services: accounting, economic and financial only started in the 20s. At this time, actively began to develop the stock market and the main problem was the financiers of the Securities.
The crisis of the 30s demanded that the financiers of the new qualifications: needed the people who know how to evaluate liquidity, the ability of companies to generate cash flows, and, of course, to detect signs of corporate bankruptcies on the set of indicators.
In the 40s began to demand the functions of planning, budgeting and cash flow estimates. With America at that time was at the height of (the country did not participate in the war and earned a lot of money on supplies of goods warring states), it took her appraisers investment attractiveness of enterprises, professionals, the ability to predict the future potential of the company.
In 50 years, there are new challenges that required by the financiers of new abilities. Number one priority is the optimal use of resources. Begin to develop mathematical economics of asset management companies, and especially popular is the concept of time value of money.
60-70's were a period of management accounting. Information about companies for the market is unified and standardized, identified the main factors assessment of the business, there is a need to understand the economics within companies. Develop models to optimize cash and stock.
80-90's witnessed the boom in investment markets. Accordingly, the functions of financial managers has increased in this area. In the area of competence of the financiers included the calculation and evaluation of investment portfolios of companies.
Thus, the modern Western financial manager - a person engaged in all of the above questions. He plans to future cash flows, liquidity position is assessed and investment attractiveness of the enterprise, analyzes the state of the financial and foreign exchange markets and stock exchanges.
We go our own way .....
In Ukraine, due to history, the development of the functions of the financial manager, as well as, in fact, the emergence of such a position, there was some other way. The first ten years of the country to a market economy, all the financial issues involved accountants. The main task of these professionals has been paying taxes, everything else - in the second place. But since the development of the economy required the companies quality performance and a number of other problems, experts had to urgently develop the whole staircase functions, traversed the West for 80 years. It is not that professional financiers at the time was not at all - in economic and universities in the Soviet times there were departments of finance and banking finance companies. However, the knowledge required by specialist companies operating in the market rather than planned, economy, are not allowed.
Period of Western 20s, ie, stage of development of the securities, Ukraine actually slipped. Now the securities are only parts of the corporate rights of banks, investment companies and enterprises issuers of securities. Financial managers of other enterprises face the challenge was not necessary, and those who perform functions related to securities that implements them in a rather truncated due to lack of development of the Ukrainian stock market. The current trend of Ukrainian business - retraining of accountants in financial managers or directors. Formally, it looks something like this: Accountant over time increases to the chief accountant, and then - to the CFO. In practice, this means adding more and more tasks to the last track record. And this is where the problems begin.
Four differences
Financial activities of any company can be divided into three main areas: accounting and tax; management accounting and budgeting, analysis of financial condition and financing of the company. So, an accountant by definition can not have three coordinate directions. He has a different kind of education, other objects and even a different type of thinking. And this is by no means impossible to blame the latter. Just a financial manager and accountant - they are different people, different positions and different functions. It is an axiom that, in view of all of the same features of the historic development of our country, has demanded proof. Consider the differences between the financial manager and accountant in detail.
So, professional competence. Accountant - a specialist who works for the accounting system in accordance with applicable law. His task - on time and properly pay taxes and to report to the state authorities, customers and partners, to monitor the state of the company's account balance and reduce to a single indicator. This is far from an easy job. It requires serious training and qualifications, especially in Ukrainian conditions which the legislation is changed with enviable regularity. Financial manager, in turn, has to manage the working capital of the company, plan cash flow and budgets of the Company, to develop financial strategies. At the same time, constantly analyzing the real economic condition of the company, comparing it with the national and even international situation in the market, should take time to certain financial solutions to optimize the situation. In addition to these, the financial director is also required to provide to the chief executive of reliable information about the current condition of the company, forecast future state and an action plan for the further development of the company. Accounting is simply unable to do so because he did not have the necessary information.
Information competency, you can probably identify as a separate item of differences between an accountant and financial manager. The first forms the accounting and tax records on the basis of the available primary data and tax laws. These figures - the results of the company for the period. That is, the figures yesterday. Predicting the future financial performance of the company on the basis of such data requires additional processing by a special method of analysis, knowledge of which is not in the area of competence of the accountant.
Finance Manager works with documents management accounting, ie, has information about the result of the daily value of the company, cash flow, sales, production and procurement, the financial condition of the company in the context of certain types of business, a strategic position on a market and Most importantly, the current value of the company for the founders and owners. These data form the basis for forecasts, budgets and strategies of the enterprise. And this information is most interested in the CEO.
A simple example of a particular statement accountant knows that a certain date the company is obliged to pay a certain amount - this is his main job, to know when and how much should be transferred to the entity did not have any problems with the law. Chief Financial Officer, in turn, has information about the condition of the company at the moment, and the future plans of the company, for example, take the credit. On this basis, it may decide: does it make sense to pay that amount now, or are the options for extending the optimization of financial position within the company. The latter, incidentally, can also be attributed to the distinguishing feature of the CFO: he is aware of the economic right and can suggest alternatives of financial reporting services, if necessary.
Naturally, the man works as an accountant at the company, may undertake the collection and analysis of data management and more. But, so it will already be engaged in two ambitious and equally important activities. In addition to the need for a new education, a person will need more and a lot of extra time and energy. Specialists coping with both functions equally well deserve respect, but, unfortunately, very few of them.
Goals - the third feature of accountants and financial managers. The purpose of accounting is transparent and obvious - that the financial activities of the enterprise tax law. Modern financial management, in turn, poses a single global task - to maximize the market (economic) value of the company with revenue growth of capital companies. The business environment of the former Soviet Union because of many factors not yet fully faced with having priority orientation precisely for this purpose, but the Western financial managers have long been working in this direction. The trend of development of the domestic economy also suggests the output of the said purpose financiers to the fore in the near future.
The difference between the objectives drags another important point that distinguishes the accountant of the financial manager, - the type of thinking. The financial manager as a person, focused on maximizing the financial performance and the market value of the company is constantly faced with the need to evaluate alternative possibilities in the capital market. To direct the company's resources in the most favorable direction, it must make financial or investment decisions only on the basis of all the risks involved and are sure to appreciate the potential return of alternative investments.
Accountant did not need evaluation of alternatives. Most important for the qualities of his work can be called a formality and punctuality. The fact that the accountant does not have an alternative way of thinking, in any case, it is not a "minus". People performing different tasks in different ways think that is absolutely normal.
Ideal scheme
So, the axiom proved. The functions of the financial manager and accountant at the company, working in a fast growing market economy, should be separated. One person can theoretically perform both jobs, but this will involve considerable difficulties for him, and did not provide the manager the possibility to receive all the necessary information.
As previously stated, the financial activity of the company is divided into three areas. So, the ideal can call the following scheme of management of these areas: the chief accountant working with accounting and taxation, planning, accounting and control incurs a financial manager and chief financial officer manages the funds of the enterprise on the basis of the analysis of data provided by the accounting department and the manager. Often companies are not allocated function of financial manager - CFO engaged in two directions. It's not as important as the division of accounting and finance.
Separation of the two functions, in addition to the needs of the enterprise, and the market demands. The importance of the functions performed by the financial director is large enough to assert that the quality of their implementation depends on the company's position in the market. That's why CFOs actually alone of all the functional departments of the enterprise managers are usually included in the board of directors. And for the business owner is not engaged in enterprise management, the CFO - the main person responsible for the profitability of his company. Therefore, a person who performs such important functions, it is better to deal exclusively with that.
References
For preparation of this work were used materials from the site http://www.gaap.ru
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