Challenges faced by Financial Managers in a Changing Economic Environment

CHALLENGES FACED BY FINANCIAL MANAGERS

The wave of globalization is bringing enormous changes on the operation of organizations. It is clear indication that globalization is inevitable. Therefore, organizations need to be in the fore front by making adjustments in all relevant areas, for them to cope with the changing environment. There is need for them to be working hard in developing capabilities to help these organizations in coping with the trends in the finance functions. This paper aims at critically analyzing the challenges that are faced by financial managers in a dynamic environment.

Increasingly, financial managers will be tasked with overseeing the finance sections. Of the organization. They assume these roles which entail creation of harmonious existence between the different departments of the organization. The financial managers confront a wide range of issues. They must ensure that their planning and operation takes account of the micro and macro environments. This will automatically improve the quality of solutions to financial problems. Driving competitive financial functions is not an easy task. The finance department is a core function. Being a core function entails devising of mechanisms to evaluating the critical decisions intended to bring changes in the organization. The main objective of any organization is growth. For them to grow, there is need to develop strategies which will help the organization progress in the face of rapid changes of the environment it operates. Therefore, effective decision making and planning are prerequisites for organizational growth. The choice of the strategies is a catalyst for thriving of the businesses in the face of the caveats presented by internal and external environments. The organizations growth has to be achieved in the cost effective way. On account of this entails that the financial managers play a fundamental role in any organization.

The finance function should run a competitive operation. They have critical role of ensuring that other departments run competitive operations. Risk management is among the vital functions of the finance departments. In overall, financial managers provide support to the business activities by enabling cost effective operations to be conducted. Therefore, employment of all the value addition strategies enables a firm to gain a competitive advantage over those of rivals. The organizations which the finance managers represent operate in global environment, which not only presents challenges to them, but also compels them in identifying new opportunities. Opportunity cannot be dealt with in isolation with challenges. The modern finance manager is a catalyst of change in the organization. These personnel are required to act in collaboration with other departments, through integration of all the activities of the organization. In this direction the finance manager therefore acts as a catalyst of change.

The main challenges that hinder the proper functioning of the finance section, are mainly attached to be originating from the working of the global economy. A cross examination of the impediments has proved that greater uncertainty of the global economy, fluctuating energy prices due to distortion of supply and demand conditions, fluctuation of foreign exchange rates, changes in commodity prices, environmental caveats, inflation and government deficits are the main challenges facing finance managers. An outlook on these challenges shows that many are associated with the changing trends of the global economy. These changing macroeconomic conditions have both individual and joined significance in influencing the work of financial managers. The conditions also influence priorities and strategy development by the management. Lastly they dictate the choice of strategy which would be chosen to compete on a global context.

This is the global environment in which the future of finance managers thrives. This macroeconomic environment houses both opportunities and challenges which would be confronted by finance function. Therefore, this paper performs an analysis of the priorities with an aim to understand the future of finance managers and finance function.

REGULATION

This is composed of all that challenges associated with compliance to investor demands. Regulation range from reporting standards to specific regulatory development. The future finance managers should work hard to eliminate cumbersome regulatory processes and ensure that only relevant regulation is embraced.

GLOBALIZATION

It is a complex environment which requires extra effort in integrating all global clients. This will entail establishment and management of virtual offices. The future of the finance function rests on its ability to wisely choose the business models and evaluate their applicability in different situations. The role of the finance managers in a global context will require designing roles to suite changing cultures, time zones and languages.

TECHNOLOGY

The finance managers are faced with a problem of analyzing huge bits of data. They must employ services of powerful computers and sophisticated software. The main challenge facing finance managers here is how to rework the data to match the trends in business operations. The future finance manager has to leverage the use of the technology if positive outcomes are to be realized.

RISK

The modern rapid changes in the macroeconomic environment of the business is coming besides a lot of risks. This risks always work against aggressiveness of the business to cut costs in its operations. The risks of the business should be analyzed at portfolio level. The role of the financial manager here will be to carefully examine the risks and opportunities attached to a certain portfolio choice. The future finance managers will need to be proactive in facing risks, through utilizing expertise and balancing between risks, capital investment and returns of shareholders.

TRANSFORMATION

There are massive transformations in logistics, outsourcing, offshore labor arbitrage amongst many others. It implies that there is need to restructure the delivery of the finance department. These transformations should inspire the finance manager to change their priorities. Finance managers are now opting to locate businesses in low cost areas and standardizations of operations in a bid to drive costs down. The future finance manage will need to utilize finance models which house all the related links with other departments.

STRATEGIES

The organizations in the modern world should embark on aligning their objectives in order to ensure smooth operation of the entire business. Harmonization and prioritization in the organization should be analyzed from the perspective of the finance manager strategy.

In conclusion, the changes in the global finance function are presenting new experiences and skills. This is increasing ambitiousness of the finance personnel. All the identified priorities in this paper will help to shape and transform the future operation of the finance managers.