The role of the finance function

Overview

What the finance function does, the information it provides, how it supports planning and decisions across marketing, HR and operations, and why lenders, investors and HMRC need it.

What you need to know

Answer each one before you reveal it.

Questions from this subtopic

Each one with the model answer underneath.

1. 1

   What is the finance function of a business?

   Model answer

   The finance function manages a business's money. The finance function records income and spending, prepares accounts and controls budgets.

2. 2

   What are the main purposes of the finance function?

   Model answer

   The finance function provides financial information to managers and owners. Financial information from the finance function supports planning and decision making.

3. 3

   What kinds of financial information does the finance function provide?

   Model answer

   The finance function reports revenue, costs, profit, cash balances and forecasts. Managers use these figures to judge how the business is performing.

4. 4

   How does the finance function support business planning?

   Model answer

   The finance function forecasts future revenue, costs and cash so managers can set realistic targets. A plan can then show how much finance a new project will need.

5. 5

   How does the finance function help managers make decisions?

   Model answer

   The finance function works out whether a decision, such as launching a product, is likely to be profitable. Managers can compare options using break-even and average rate of return.

6. 6

   How does the finance function influence the marketing department?

   Model answer

   The finance function sets the marketing budget and checks whether campaigns are affordable. A campaign may be cut back if it does not pay for itself.

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