RUNNING HEAD: CHALLENGES FACED BY FINANCIAL MANAGERS 

CHALLENGES FACED BY FINANCIAL MANAGERS

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INSTITUTION
CHALLENGES FACED BY FINANCIAL MANAGERS 

Executive summary

The occurrence of significant challenges and fast changes in the macroeconomic

environment has increased the role of financial managers. Their traditional roles involved

financial planning, financial reporting capital structure and capital budgeting. In recent times,

their roles have evolved into other strategic dimensions that define the part of business managers.

One of the primary functions that had been given to financial managers involves communicating

professionally to both investors and the board. The purpose of this paper is to elaborate an

overview of the challenges that the current financial managers are facing in the current context of

changes in the macroeconomic environment and how these challenges affect the business

operations (Karadag, 2015)..

The macroeconomic environment has experienced changes that affected operations of the

business, changes in priorities and strategies and how the various departments had to adapt. This

has caused increased complexity of the economic system leading to a subsequent increase in the

complexity of business operations and increased interaction among global economic players.

Such changes meant more complications experienced during this turbulent times. This increases

the complexity of the role of managers and especially financial managers. We need to assess how

finance function adapted to these uncertainties and complexities and how company CFO and

board have adapted to these strategies in the finance department.

Challenges in the finance department include technology, infrastructure and human

resources. The organisation complexities increase with a better process that incorporates

technology to analyse and collect critical financial data required in the decision-making process.
CHALLENGES FACED BY FINANCIAL MANAGERS 

The finance department can make good use of the technology which implies that they will need

talent with a proper mix of knowledge and skills to apply this technology at its value. The human

resource requires extra skills to attain this objective. The role of the finance manager has shifted

from the traditional purpose of reporting from the past to the current strategic and

transformational role. The finance manager needs to involve themselves with more strategic

value-added activities.

The current unpredictable global markets have imposed new demands on the role of

finance manager. The finance manager is expected to support scalability, flexibility and

responsiveness in multiple opportunities and challenges faced by the world. The reduced revenue

has forced companies to increase efficiency, reduce costs and make cuts when deeming fit and

increase productivity. The current focus is mainly on productivity which involves entering new

markets in the unpredictable market environment. To manoeuvre in this uncertain economic

environment, there is a need to acquire new and appropriate skills regarding those that manage

the finance department of companies. The finance department should provide better guidance to

navigate the turbulent times.

Challenges to finance manager

Regulation- The uncertain and complex macroeconomic environment has increased the

speed of the regulatory changes that have further improved the need to harmonise regulation

across borders. This means increased responsibilities to the CFOs to accelerate compliance with

all rules and to ensure the finance department has qualified professionals that can quickly adapt

and implement the new regulatory changes. Professionals in the finance department are tasked

with the responsibility of influencing regulatory and policy in place of their business.
CHALLENGES FACED BY FINANCIAL MANAGERS 

Globalization- CFOs and another finance manager should have experience, and global

perspective as the business becomes global. They need to comprehend how their company

operates in various cultures, different regulatory areas and region to introduce finance function to

the overall industry while increasing into new markets.

Technology- The finance manager should be part of the data revolution. The data should

be collected and processed. The more complex software can be employed in data collection and

analysis. A practical business should be put in place where the finance manager employs

available information to gather, analyse and standardise data. The use of the technology will

reduce the time spent on data collection and hence spare time will be used in connecting the

information and providing valuable input in the decision-making process and their influence on

business. A greater opportunity exists in these turbulent periods that uses extensive data and tool

to provide insight into how they can be used for further development of the business (Mertzanis,

2013).

Risk- Finance manager faces a significant challenge in risk management. They are no

longer involved in only cost-saving strategies. In the current highly uncertain environment, the

CFOs have to approach the numerous uncertainties and risks proactively to safeguard the assets

of the company, to reduce poor behaviour that can erode value, implement right policies that

affect the investments, shareholder return and cash availability. The balance on the risk-return is

essential in this fast-changing business environment.

Transformation- The finance manager experience two kinds of change. One involves

outsourcing and other shared values/services that take into account the purpose of the diversified

skills in the more complex and fast-changing business environment. This will attract more risk to
CHALLENGES FACED BY FINANCIAL MANAGERS 

the business that needs to be carefully managed. The other part of the transformation is related to

the finance function that focuses on the compelling analysis of the business process.

Management of stakeholders- The finance manager should not only prove both

controllership and finance leadership but also act as a strategic partner to the CEO. The top

management team consist of the senior finance executives, and they need to introduce their input

to better the strategic decision making of the board. The CFOs need to communicate

appropriately with hence should have excellent communication skills. They not only need to talk

to investors, banks and financial experts but in proper language to media, board members and

clients.

Strategy- The finance manager should be in a position to connect the analysis output and

finance specific activities to the realities of the business to assist in the implementation process

and strategy formulation. The finance managers should focus on balancing the strategy and

numbers. The role of the finance manager should now focus on the method of achieving long

term view on the process of business development rather than forecasting and analysing past

performance in the short term.

Reporting- The finance manager should not only focus on attaining financial goals

beyond sustainability parameters. They should focus on the environmental and social objectives

outside the traditional macroeconomic parameters. This has resulted in drastic economic changes

in how decisions are made and the measurement of performance. The bottom reporting segment

has a triple line which includes reporting and analysis on the economic, social and financial

metrics.
CHALLENGES FACED BY FINANCIAL MANAGERS 

Capability and talent- The challenges of the CFOs in a global context involves diverse

skills required to respond to the fast-changing and more complex financial operations and

functions that are developed abroad. They need working with talents from various cultures

incorporating employing advanced technology among the virtual teams. The profile of the CFO

has evolved from a specialist to a person with much broader skills and view of the business

operations.

With the evolutions of the economic environment and more diverse role of the finance

manager, the finance department has been forced to be split into two areas that include routine

transaction oriented and the other is high value analytic and strategic. The finance managers

should possess more complex skills and talents. They should have a more strategic overview

over the development of the industry and opportunities that exist for the company, project

management and communication skills, IT skills that involves using more complex software,

attaining mastery in some foreign languages and achieving international perspective for the

company. They should generally possess an appropriate mix of competencies, skills and

knowledge with high component involved in operations, strategy and sophisticated analytics.

Recommendation

The finance manager is expected to understand how the organisation works and provides

other decision makers with the appropriate information they require more comprehensively. The

finance managers should not only have technical capabilities, but they need to make a difference

in the CEOs team. They should be in a position to select and make judgments based on the

strategic priorities of the business. They need to bridge the language barrier concerning the

technical vocabulary used by the finance managers to contribute to value creation of the
CHALLENGES FACED BY FINANCIAL MANAGERS 

company. They need to explain to the board and departments what the meaning behind the

numbers is (Runtev, 2017).).

Conclusion

The business operates in an uncertain, turbulent, dynamic and changing economic

environment. A lot of pressure is exerted on the finance manager and other departments to

allocate resources more efficiently. They are also expected to gain a balance on both short term

and long term priorities and strategies to balance long term growth opportunities and

counterbalance reduction of costs. This means that a career in finance and accounting have

evolved into new challenges. By leading the finance department in one part and being a senior

member in the other part means the finance manager needs to have the appropriate skills to cope

with the challenges.

Reference

Karadag, H. (2015). Financial management challenges in small and medium-sized

enterprises: A strategic management approach. EMAJ: Emerging Markets Journal, 5(1), 26-40.

Runtev, m. (2017). New trends and features of international financial

management. Economic development/ekonomiski razvoj, 19(3).

Mertzanis, C. (2013). Risk management challenges after the financial crisis. Economic

Notes: Review of Banking, Finance and Monetary Economics, 42(3), 285-320.