Roles and Responsibilities of the Finance Department

<< THIS CAN BE USED FOR JOB APPLICATIONS / INTERVIEWS >> when they ask what do you expect a finance department do - OTHERWISE can be used for Financial Accounting assignments :)! Hope it helpsThe Finance DepartmentThe finance department of a business manages money for thebusiness/company. The department records the financial transactions ofa business and helps it plan for the future financially.

Activities of the finance departmentRecording all the financial maters of a business/companyBusinesses and company's are constantly spending money or receiving itfrom the sale of its goods or its services. It is important that abusiness keeps a record of all this so that the business can:· Calculate whether the business has made a profit or not· Assess how much tax the business is going to have to pay· Help managers to make decisions financiallyPreparing annual accounts and reportsAll businesses make accounts to summarise their financial transactionsduring that year. Large companies and big businesses have to legallypublish a detailed account of their transactions throughout the year.

The most important parts which make up these accounts are:· The balance sheet, which shows both what a business owns and itsdebts· The profit and loss account, which records the profit or loss thebusiness has made over 1 yearDifferent accounts are useful to different people; some accounts mayonly be made for a specified audience or person to view. Examples ofthis are;· The Inland Revenue, they confirm that a business has paid the rightamount of tax or how much tax the business owes· Suppliers can see whether the business is able to pay them/debts· Shareholders can make a judgement on whether its worth investing inthe business· Banks they can see whether its worth them giving the company orbusiness a load or overdraft because that may not be able to repaythemPaying employees wages and salariesWages and salaries (monthly pay) involve the finance departmentorganising employees wages from calculating how much they are owed anddistributing the money to them. Some of the activities are;· The business has to take away income tax and national insurance fromemployees pay· The company may be required to have a pension scheme for itsemployee's· It will need to keep thorough and accurate record of wages andsalaries so that not money is lost through paying mistakesGetting hold of capital and other resourcesAll company's and businesses need some sort of start up costs orresources and costs while its running. To buy the resources or to payfor these costs, businesses might need to raise money in order to dothis aka capital.

A business has 2 main sources of capital;Load: this is by borrowing money from either a bank, building societyor another business, but you have to pay them back, you are usuallypenalised with interest over a period of timeRetained profits: if the business has previously been profitable, itmay of kept some of the profits to invest into resources which theymay need laterAlso companies or businesses can sell shares to raise more money(capital). The people who buy these shares give me in order to have apart of owning it.

Other functions of the finance departmentThe running of the finance department affects other parts of thebusiness. For example:· Places orders, processes them and pays bills for other departmentswithin the company· Gives advice to other departments to their expenditure e.g. money tobuy office resources· Helps senior managers make decisions financially which could affectthe whole business