Function of Finance Department

1st Function – To Prepare the Budget

It is duty of finance department of company to make the budget before actual providing money to any department. It will be helpful to fulfill each department with minimum cost. Finance department can take the past records from respective department. It will be useful for making better budget.

2nd Financial Management

In this function finance department gets money from capital market at very low risk and cost. Finance department analyzes all the resources of funds and create a good financial structure of company. In this structure, finance department analyze whether it will decrease the overall cost of capital on Average basis or not.

3nd Management of Investments of Company

After making financial structure, finance department invests debenture holders and shareholders money in best projects for getting highest return on investment. For this finance department has to take investment decision. These investment decisions can be taken with the help of capital budgeting and investment analysis techniques.

4rd Management of Taxes

Management of taxes is also the function of finance or finance department. Taxes may be direct or indirect. Finance department continue watches the amendments and updates in tax laws and also create good corporate relation with government by paying return of corporate tax on the time.

5th Management of Financial Risks

Finance department takes many measures for managing the financial risks of company. For reducing loss of fund due to happening liquidity, solvency or financial disaster, finance department makes a good plan and also takes the help of debt collectors, insurance companies and other rating agencies for reducing financial risk.

6th Merge or Acquisition decisions

For creating good brand in the market, financial department works with marketing department and both takes the steps of merge and acquisition action. Main aim of merge or acquisition is to reduce competition and spread on brand in the market. Finance department provides the money for takeover any other firm for estimating its long run return.