Finance departments are an integral part of an organization, providing the fuel to keep it moving forward. By communicating, managing money wisely and staying informed about available opportunities, finance departments can ensure a steady flow of funds into the organization.
Develop an Accurate Budget
Financial departments strive to develop a realistic budget that clearly indicates what the organization will spend. In doing so, they help all branches of the organization to plan their activities. The budget must clearly show how much departments can spend on each particular activity or necessity, such as new equipment. To create an accurate budget, the finance department must communicate effectively with the heads of other departments to determine what they need and modify unrealistic objectives.
Coordinate With Other Departments
A finance department must also strive to coordinate the flow of funds with the organization’s activities, using long-range planning while preparing for short-term needs. This involves timing, making sure the organization has sufficient funds for its activities when needed. In other words, if an organization will be receiving a large grant in November but needs funds for a new project in July, the finance department and other departments should discuss whether they can gain sufficient funds or should initiate the project later.
Procure Funds From Appropriate Sources
The finance department must decide how much debt the organization should have, keeping in mind its ability to pay back that debt. The department must then decide which sources of funding – such as loans, stocks and grants – would best meet the organization’s needs and purpose. Then it must research the available opportunities and interest rates, if applicable, and apply for these opportunities. Likewise, the finance department should invest the funds it receives wisely in order to make them grow.
Pay Off Debts
One of the major finance department goals is paying back their organizations’ creditors in a timely and fair manner. This shows creditors the organization can be trusted and has been managing its funds wisely, making them more likely to continue investing in the organization. Furthermore, the financial department must decide how much of any surplus funds to divide among shareholders to encourage investing.
Ensure Trust Through Transparency
A finance department should strive for transparency of its operations so investors, clients or others associated with the organization know they can trust its staff. This means providing thorough and accurate financial information to all stakeholders. To meet this objective, the department should keep careful records of all transactions and communicate clearly with anyone who requests information.