What is financial management and what does a financial manager do?

With the combination of education, experience and professional certifications, you may be able to choose between various finance manager roles. 

No matter the type of financial management, most employers require a minimum education of a bachelor’s degree in business, economics, finance or a related field. A degree in business with a certificate in finance equips you with knowledge and skills to understand key concepts. Likewise, a Bachelor of Science, a financial planning certificate or classes in small business financial management can provide a solid foundation of principles.

An online business degree can be advantageous as it provides the flexibility to continue working while earning your degree and offers you access to an expanded network of professionals.

Once you’ve gained an education and preliminary working experience, look for entry-level roles at a bank, an investment firm or a related organization. You’ll likely will receive a more technical understanding of financial planning, products and services. Volunteers who have experience in counseling clients on their finances may also find opportunities to network and build relationships within the industry.

According to the U.S. Bureau of Labor Statistics (BLS), in addition to earning a bachelor’s degree, financial managers often need to have at least five years of experience in a similar occupation, such as an accountant or financial analyst. These roles can be stepping stones to a career as a finance manager or they can be similar occupations if they are more appealing career options. Let’s briefly explore both.

Accountants and auditors prepare and examine financial records, and determine potential opportunities and risk while also providing solutions. One aspect of their job is to ensure records comply with laws and regulations and to identify potential risks for fraud. While a bachelor’s degree is typically required, important skills to have in this role include being good at math, being detail-oriented, having analytical and critical-thinking skills, and being a good communicator.

Financial analysts help businesses and individuals with their financial decisions, such as how to expend money to attain profit. They may also examine financial statements to understand the overall value of their client, recommend investments, prepare written reports and stay up-to-date on economic and business trends. Bachelor’s degrees typically are required for this role, but analytical, communication and decision-making skills are important, as is being detail oriented.

Although BLS classifies financial managers as a stand-alone role, there are a few occupations that it considers as “types” of financial managers. Roles vary by the responsibilities, topics, tax laws or regulations specific to the industry or organization where a financial manager works. This can include government or healthcare positions. Let’s explore each and their unique responsibilities. 

Please note that University of Phoenix educates graduates to become financial managers. While the information below describes types of that role, the University cannot guarantee that the specific skills required for these roles are taught in its programs. This information is designed to help you understand the scope of the industry, so you are better informed about your career decisions. 

Treasurers oversee a company’s assets, including cash, investments and other financial resources. Their role is to optimize the use of these assets, strategically allocating funds to meet an organization’s objectives and maximize profitability.

Other crucial responsibilities include:

• Creating and monitoring budgets, completing financial reports, and ensuring that expenditures are aligned with a company’s financial goals
• Analyzing financial data, identifying areas where costs can be controlled or reduced, and providing recommendations to optimize spending
• Ensuring the company has sufficient cash flow to cover day-to-day operations, investments and financial obligations
• Assessing and mitigating financial risks such as market fluctuations, interest rate changes, currency risks and credit risks
• Negotiating banking relationships, managing debt and credit facilities, and communicating financial performance to investors and management

Their expertise plays a pivotal role in driving the company toward success.

Credit managers work to establish credit policies and guidelines. They assess customers’ creditworthiness, set credit limits and determine appropriate payment terms.

They also develop strategies for managing a company’s debt. They analyze risk factors, monitor credit exposures and recommend solutions to potential problems. 

Additionally, credit managers:

• Monitor customer payment patterns, assess the risk of late or non-payments and implement strategies to minimize potential losses
• Analyze cash-flow patterns, identify opportunities for efficiency and implement measures to improve collections and reduce bad debt
• Establish and enforce payment policies, monitor payment trends and follow up on delinquent accounts
• Stay informed about evolving credit practices, legal requirements and compliance standards
• Collaborate with sales and customer service teams to ensure a smooth and equitable credit application process, address customer inquiries and resolve payment disputes

Since credit managers are responsible for payment compliance and credit risk assessment, they play a critical role in maintaining a company’s financial stability.

First and foremost, risk managers assess and analyze potential risks the company may face. They conduct thorough risk assessments, examining areas such as operations, finance, legal compliance, technology and more. 

Once risks are identified, insurance managers step in to provide protection. They work closely with insurance brokers and underwriters to evaluate the company’s insurance needs. Then, they recommend and secure appropriate insurance policies that offer coverage for potential losses or liabilities.

Risk and insurance managers also play a pivotal role in managing insurance claims. They liaise between the company and insurance providers, ensuring claims are filed accurately and efficiently. They follow up on claims, facilitate communication and work toward a fair resolution.

In addition to these responsibilities they:

• Strive to create a culture of risk awareness: They educate finance managers and other employees about potential risks, and they develop training programs and promote best practices to minimize risks.
• Keep up with industry trends and regulatory requirements: They stay informed about changes in laws, regulations and insurance policies.
• Develop business continuity plans: This ensures a company has strategies to mitigate risks and maintain operations in the face of disruptions.
• Coordinate emergency response efforts: They work closely with other departments to ensure a company can effectively navigate challenging situations.

Although risk isn’t the ultimate decider of an organization’s financial success, it is key in maintaining security — something that risk managers ultimately strive for. 

Cash managers work diligently to monitor, control and forecast a company’s cash flow. By understanding a company’s cash position, they can make informed decisions and strategies to ensure a healthy and sustainable cash flow.

They also work closely with financial institutions to establish and maintain banking services that support the company’s cash management objectives. They negotiate favorable terms for banking services, such as cash concentration, electronic fund transfers and short-term investment options.

Other duties include:

• Analyzing cash positions, forecasting cash needs and making informed decisions about short-term investments or borrowing options
• Developing procedures for cash handling, approvals and disbursements to prevent fraud, misappropriation or errors
• Collaborating with other departments to ensure smooth coordination of cash management activities

They ensure that a company can make timely and informed decisions about its financial resources.