Running the Money

Running the Money

They’re invisible. They’re legendary. They control our world in so many unseen, and incredibly powerful ways.

Today, a skilled manager makes more than the owner. And owners fight each other to get the skilled managers. ---Mikhail Khodorkovsky

No, they aren’t aliens or vampires. They are Money Managers. Or, for you Erudites, we can call them financial managers.

Be in awe. Their power is incredible. Because they control our world’s financial blood— money!

The managers of money. Those who run the cash. The runners of money.

In a real sense, they are the field officers running our liquidity system. It’s true. Almost every firm, government agency, or any other type of organization has at least one (if not more) financial managers.

Financial managers control financial reports, direct investment activities, and implement cash management strategies. Managers also develop strategies and implement the long-term goals of their organization.

The duties of financial managers are many and ever-important. Some are— controller, treasurer or finance officer, credit manager, cash manager, risk and insurance manager, and manager of international banking.

Controllers direct the preparation of financial reports, such as income statements, balance sheets, and analyses of future earnings or expenses, that summarize and forecast the organization’s financial position. Controllers also are in charge of preparing special reports required by regulatory authorities. Controllers even oversee the accounting, audit, and budget departments.

Treasurers and finance officers direct the organization’s budgets to meet its financial goals. They oversee the investment of funds, manage associated risks, supervise cash management activities, execute capital-raising strategies to support a firm’s expansion, and deal with mergers and acquisitions.

Credit managers oversee the firm’s issuance of credit, establishing credit-rating criteria, determining credit ceilings, and monitoring the collections of past-due accounts.

stacks of money in bills and coins

Cash managers monitor and control the flow of cash receipts and disbursements to meet the business and investment needs of the firm. For example, cash flow projections by managers determine whether loans must be obtained to meet cash requirements or whether surplus cash should be invested in interest-bearing instruments.

Risk and insurance managers oversee corporate programs to minimize risks, and losses, that might arise from financial transactions and business operations. They also manage the organization’s insurance budget. These can be billion-dollar decisions.

Managers specializing in international finance develop critical financial and accounting systems, for the huge banking transactions of powerful multinational organizations.

Financial institutions—such as commercial banks, savings and loan associations, credit unions, and mortgage and finance companies—employ additional financial managers who oversee various functions, such as lending, trusts, mortgages, and investments, or programs, including sales, operations, or electronic financial services.

At the local level, Branch managers of financial institutions administer and manage all of the functions of a branch office. Job duties may include hiring personnel, approving loans and lines of credit, establishing a rapport with the community to attract business, and assisting customers with account problems.

Government financial managers must be experts on the government appropriations and budgeting processes, whereas health care financial managers must be knowledgeable about issues surrounding health care financing.

All financial managers must stay abreast of special tax laws and regulations that affect their industry.

Financial managers play an increasingly important role in mergers and consolidations and in global expansion and related financing. These areas require extensive, specialized knowledge to reduce risks and maximize profit.

Financial managers increasingly are hired on a temporary basis to advise senior managers on these and other matters. In fact, some small firms contract out all their accounting and financial functions to companies that provide such services.

Financial managers held about 506,000 jobs in 2006. Although they can be found in every industry, approximately 3 out of 10 were employed by finance and insurance establishments, such as banks, savings institutions, finance companies, credit unions, insurance carriers, and securities dealers. About 8 percent worked for Federal, State, or local government.

Employment growth for financial managers is expected is to be about as fast as the average for all occupations. However, applicants will likely face strong competition for jobs. Those with a masters’ degree and a certification will have the best opportunities.

As banks expand the range of products and services they offer to include insurance and investment products, branch managers with knowledge in these areas will be needed. As a result, candidates who are licensed to sell insurance or securities will have the most favorable prospects.

Median annual earnings of wage and salary financial managers were $90,970 in May 2006. The middle 50 percent earned between $66,690 and $125,180. The lowest 10 percent earned less than $50,290 while the top 10 percent earned more than $145,600.

Median annual earnings in the industries employing the largest numbers of financial managers

According to a survey by Robert Half International, a staffing services firm specializing in accounting and finance professionals, directors of finance earned between $79,000 and $184,000 in 2007, and corporate controllers earned between $61,250 and $149,250.

Large organizations often pay more than small ones, and salary levels also can depend on the type of industry and location.

Many financial managers in both public and private industry receive additional compensation in the form of bonuses, which, like salaries, vary substantially by size of firm.

Deferred compensation in the form of stock options is becoming more common, especially for senior-level execs. Instant millionaires, or sometimes even billionaires, are often created this way.

So, how do you start? With the degree, of course!

A bachelor’s degree (in finance, accounting, economics, or business administration) is the minimum academic preparation for financial managers.

At higher levels, employers want graduates with a master’s degree, preferably an MBA in business administration, economics, finance, or risk management.

Continuing education is vital to financial managers, who must cope with the growing complexity of global trade, changes in Federal and State laws and regulations, and the proliferation of new and complex financial instruments.

Firms expect their managers to keep developing and broadening their knowledge. This means graduate courses at colleges and universities, or attending the latest conferences related to their specialty.

Why so much pressure? Because such vast sums are at stake— academic financial programs develop strong analytical skills. Managers must also continually master the latest financial analysis methods and technology.

So, go for a bachelor’s degree in finance, or accounting, or a related field. That’s your minimum academic preparation. Yes, it takes work and study. Everyone starts there.

And remember, employers increasingly seek graduates with a master’s degree in business administration, economics, finance, or risk management.

With a strong degree, like an MBA in Finance, you’ll find yourself in rising demand in our cash-strapped economy.

The MBA can put you on the high road, with the big dogs, in the big companies.

And your chances of building your own personal fortune are exponentially greater— because you’ll be the one who knows how to run the money!

For information about careers and certification in financial management, contact:

  • Financial Management Association International, College of Business Administration, University of South Florida, Tampa, FL 33620.

For information about careers in financial and treasury management and the Certified Treasury Professional program, contact:

  • Association for Financial Professionals, 7315 Wisconsin Ave., Suite 600 West, Bethesda, MD 20814.

For information about the Chartered Financial Analyst program, contact:

For information on The American Institute of Banking and its programs, contact:

  • American Bankers Association, 1120 Connecticut Ave. NW, Washington, DC 20036.

For information about the Certified in Management Accounting designation, contact:

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