Published On: Fri, Aug 17th, 2018

Stellar Finance Team at Yellowstone Capital LLC, NY

What does a company’s finance department do? While the question is a simple one to answer, it’s quite a legitimate one. Finance is the elixir that aids in the establishment of a new business, and allows it to widen its scope of work while ensuring its stability and adhering to all the state/federal rules and regulations. The tactical use of financial instruments, including investments and loans, is an important factor for a business to excel – be it small, medium or a large one – which is the basic responsibility of a finance team.

The small business finance experts at Yellowstone Capital LLC believe that a stellar finance team is the key to the success of a business. The stronger the financial advisory team of a company, the sooner it will succeed.

photo/Steve Buissinne via pixabay

Basic Functions of a Stellar Finance Team

  1. Bookkeeping and Payables/Receivables: Bookkeeping is the first and the basic activity performed by the finance team of a company. It systematically records, organizes and reports financial transactions of an organization, and further aids in interpreting the company’s performance and position in order to assess its ability to take risks and scale up activities in future.

As an organization grows, its finance team grows as well, comprising of specialized payables and receivables clerks, to overlook important functions like corresponding with supplier and vendors, and perform above and beyond recording transactions.

  1. Strategic Planning, and Financial Planning & Analysis: A finance team regularly creates strategic and financial plans for the company, which helps in forecasting its future financial standing and growth prospects. They compare the organization’s actual results to define the areas of its excellence and improvement.

The use of a strong Financial Planning & Analysis function not only assists in generating annual forecasts but also aids in updating them on a regular basis, while running a multitude of scenarios which examine a variety of effects, say, losing a big, old client or an economic contraction, etc.

  1. Treasury & Working Capital Management: The next key function of a finance team is to ensure a company doesn’t run out of capital. This means that, amid a plethora of things that the team does, it also forecasts the upcoming working funds, including payables, receivables and inventory, invests surplus capital in short-term investment schemes which generate interest income and strategically manages currency risk for the company.
  2. Capital Budgeting: Capital budgeting is nothing but the art of selecting smart capital use options. Most organizations have funds available to invest in their business with a hope to either grow their sales or reduce expenses. However, spending opportunities usually exceed the amount of capital available at hand for dispose. Here, the capital budgeting function of a finance team aids in smartly forecasting project benefits, track their future feasibility and determine whether or not the use of capital will be as effective as initially planned.

5. Tax and Compliance: Running a successful business means paying taxes, and paying taxes means doing a lot of calculations. Here, the finance team of an organization makes sure that all tax related forms and formalities are completed within a set time frame and sent to the taxman for final filing. A good finance team also finds smart ways to minimize tax and maximize the company’s net income.

Author: Ravi Kumarr Gupta

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