Financial managers are the architects of financial strategy, guiding companies through the complexities of budgeting, investment, and compliance.
They ensure that a company’s finances are in order while using their expertise to forecast economic trends and mitigate risks.
This article covers the diverse responsibilities of financial managers, their earning potential, and the pathways to entering this rewarding field.
What do financial managers do? (Roles and responsibilities)
Financial managers serve as the backbone of a company's financial health, overseeing everything from the creation of financial reports to the management of investment activities.
Their expertise and awareness of market conditions, credit instruments, financial analysis, insurance, and risk factors help their employers adapt to changing economic climates.
Listed below are a few of the key roles and responsibilities they perform.
Preparing financial reports
Financial managers are responsible for preparing financial statements and reports for the chief financial officer as well as senior management, other stakeholders, and regulatory bodies.
To do this, they need a strong grasp of financial reporting systems and accounting principles to ensure accuracy and compliance.
Financial management
Financial managers analyze market trends to help their organizations navigate changing conditions and meet their financial goals.
They balance financial risks against anticipated returns, often coordinating with financial analysts to help ensure that the company's financial decisions around managing debt and investments promote overall stability and growth.
Financial planning
Financial managers are responsible for understanding the long-term goals of the company and devising plans and risk management strategies to help meet these objectives.
This could entail seeking out lines of credit, managing insurance and credit departments, or finding ways to improve cash flow and reduce costs.
Monitoring financial health
Regularly reviewing financial data, such as collection reports and risk reports, helps financial managers monitor the organization's financial health and its ability to meet its financial obligations.
Tasked with identifying areas for financial improvement, they strive to be proactive in addressing delinquent accounts and inefficient financial practices while optimizing the use of financial resources.
Ensuring compliance
Staying up-to-date with regulations and overseeing the preparation of regulatory reports is another vital role.
Financial managers need to ensure that all financial activities comply with laws and financial regulations to safeguard the company's integrity and prevent legal issues.
Educating teams and clients
Offering training programs and guidance to both business customers and internal teams is another important part of a financial manager’s job.
This helps promote a deeper understanding of finance-related topics so the rest of the company—and their clients—can take full advantage of the financial services they offer.
How much do financial managers make?
Because financial managers play a significant role in the financial health of their organizations, they're often paid quite well. Still, that salary can vary widely.
Here are a few of the most important factors that can affect how much a financial manager makes — and whether they fall closer to the top or bottom of the average range.
- Experience. Typically, financial managers with more years of experience command higher salaries due to their financial expertise.
- Education. Holding an advanced degree in finance or a related field, such as an MBA, can lead to higher earning potential.
- Industry. Financial managers may work in a variety of sectors, from government to healthcare to manufacturing, and salaries can differ greatly from one industry to another.
- Location. Geographical area can significantly impact compensation due to cost of living differences and demand for professionals in specific regions.
- Company size. The size and revenue of the company can also affect salaries, with larger and more profitable companies often able to offer higher pay.
- Certifications. Financial managers who have professional certifications, such as the Chartered Financial Analyst (CFA) or Certified Public Accountant (CPA), may have a competitive edge in terms of salaries.
- Performance. In many organizations, finance managers may receive bonuses or commissions based on the company’s financial performance, which can substantially increase their overall earnings.
What is the average salary of a financial manager?
Financial managers have an average salary range that falls between $104,000 and $204,000 annually, depending on the factors listed above.
For example, entry-level financial managers might see salaries on the lower end of the spectrum, while those with significant expertise and responsibility may be compensated well above the average range.
Remember too that bonuses, stock options, and other financial benefits can significantly increase a financial manager's total compensation package.
Here's a simplified salary table for a financial manager based on experience levels:
Financial manager salary
Again, these figures are only averages. If you’re considering a career as a financial manager, be sure to research specific industries and locations as well as potential paths for your education, certifications, and career development.
How to become a financial manager
Financial managers never stop learning. Here are the basic elements that help financial managers land favored positions that pay on the higher end of the average scale.
Education
Most financial managers start with a bachelor's degree in finance, accounting, economics, or business management.
To strengthen their expertise, many pursue a Master's degree in finance, business administration (MBA), or related fields that are highly regarded in the industry.
Experience
Prospective financial managers often accumulate hands-on experience in other business or financial roles first, such as financial analysts, accountants, or auditors.
Many also benefit from on-the-job training programs, which help them understand the specific financial activities and operating systems of their companies.
Certifications
Beyond formal education and experience, obtaining relevant certifications can greatly enhance your job prospects and potential earnings.
Certifications demonstrate expertise and a commitment to professional growth, making candidates more attractive to employers.
Here are some prominent certifications that aspiring financial managers might consider:
1. Chartered Financial Analyst (CFA)
The CFA designation is one of the most recognized certifications in the finance industry. It covers a range of topics, including investment analysis, portfolio management, and ethical practices.
The CFA program requires candidates to complete a series of rigorous examinations and typically requires several years of professional experience in the finance sector.
Earning the CFA credential can significantly boost a financial manager's credibility and career advancement opportunities.
2. Certified Public Accountant (CPA)
The CPA designation is invaluable for financial managers, particularly those involved in accounting and financial statement preparation.
The CPA certification requires passing a series of exams and gaining practical experience under the supervision of a licensed CPA.
This credential demonstrates proficiency in accounting principles, auditing, and tax matters, which can be critical for financial managers in public or corporate finance roles.
3. Certified Management Accountant (CMA)
The CMA certification focuses on financial management and strategic management skills, including financial planning, analysis, control, and decision support.
Candidates need relevant work experience and must pass two rigorous examinations that encompass a broad range of topics, including budgeting, performance management, risk management, and corporate governance.
Holding a CMA credential indicates to employers that the financial manager is equipped to guide an organization’s financial strategies and manage its resources efficiently.
4. Certified Treasury Professional (CTP)
The CTP certification focuses on cash management and the ability to oversee an organization’s treasury functions. It encompasses areas such as liquidity management, cash forecasting, risk assessment, and investing excess cash.
Candidates must first meet certain prerequisites, including a combination of education and professional experience in treasury or finance roles.
Finally, they need to pass a comprehensive exam that assesses their knowledge in areas such as cash flow management, corporate finance, and compliance regulations.
How financial managers can leverage automation to help their roles
Being a financial manager often comes with significant amounts of stress. Handling such important responsibilities while ensuring accuracy and compliance under tight reporting deadlines isn't easy.
To lighten that load, financial automation platforms like BILL can make many routine tasks faster, easier, and more accurate, helping financial managers spend more time on financial planning and the more strategic aspects of their jobs.
Here are several ways in which financial automation can help support a financial manager’s role.
Automated financial reports
BILL’s automation simplifies the consolidation and presentation of financial data, ensuring timely and accurate reports for management analysis.
Streamlining financial activities
With BILL, manual entry and repetitive tasks are significantly reduced, helping financial managers focus on higher-level strategic planning and investment activities.
Enhanced cash flow management
BILL’s platform provides real-time insights into cash flow, enabling financial managers to make informed, proactive decisions about lines of credit and investment opportunities.
Vendor and payment automation
By automating payments and vendor interactions, BILL helps financial managers manage payables efficiently, reducing the risk of delinquent accounts and improving relationships with business customers.
Integrated financial systems
BILL’s platform integrates with existing financial reporting and operating systems, helping to ensure that financial managers have a comprehensive, up-to-date view of their company’s financial status.
Financial manager FAQ
Whether you're considering a career in financial management or simply want to understand what drives these financial professionals, these FAQs cover some of the most commonly asked questions about this pivotal role.
What skills are required for financial managers?
Financial managers need a solid foundation in finance principles, accounting procedures, and economic analysis. An adept financial manager typically holds a degree in finance or a related field, complemented by experience and on-the-job training programs.
Beyond formal education, the position demands strong analytical skills to interpret financial statements, assess market trends, and make forecasts. Financial managers also need exceptional communication abilities to explain complex financial concepts to colleagues and clients who may not have a finance background.
Finally, leadership skills are vital, as financial managers often guide teams of financial analysts and work closely with departments like credit and insurance to implement strategies and financial plans.
The job isn't just about crunching numbers—it's also about strategic thinking and effective people management.
What is a primary area of concern for financial managers?
Financial managers are primarily concerned with the financial health of an organization. Keeping abreast of current market conditions and the overall status of the firm, they provide financial and regulatory reports that drive strategic decisions.
More specifically, they're tasked with overseeing financial activities from creating budgets and analyzing the company's financial performance to developing strategies for meeting long-term financial goals.
Moreover, financial managers must keep a close eye on investment activities and the organization's cash flow to manage resources efficiently and address any negative impacts on the company's finances.
How stressful is being a financial manager?
The role of a financial manager can often be a challenging, high-pressure position. Handling a company's financial operations and ensuring accurate financial reporting systems is a significant responsibility.
The pressure increases when working with tight deadlines, particularly during end-of-year fiscal reports or when unexpected market trends require quick strategic adjustments.
Additionally, a financial manager must stay informed about changes in market conditions, regulatory requirements, and the economic environment — especially when those changes could significantly affect the company’s prospects.
Yet, despite these demands, many financial managers find their work tremendously fulfilling. Today's automation tools can help ensure speed and accuracy, relieving those pressures while helping financial managers focus on the more interesting, strategic aspects of this important position.
