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Finance Functional Model
Functional Statements
​By Mansour Baker, SHRM-CP
Posted  19 March 2020
The finance functional areas are grouped into activities or processes based on their need in accomplishing tasks.
Exhibit 1
The Finance Functional Structure Model
Described below are the functional statements for the Finance team
Level 2 Finance Functional Statements
Financial Systems Support
  • Develop finance’s IT system strategy
  • Determine Finance department’s functional/business IT system requirements
  • Develop IT budget
  • Establish policies, and processes for the Finance Systems Support department
  • Oversee implementation of Finance Management System and define system design customization and updates/upgrades
  • Monitor Finance Management System performance
  • Provide user support to ensure full leverage of system capabilities
  • Provide end-user training
Financial Planning, Budgeting and Control
  • Establish effective and rigorous policies in the Financial Planning, Budgeting and Control Department
  • Develop and monitor the Financial performance evaluation process and report on all financial data and KPIs, 
  • Review annual plans and budgets produced by divisions and support functions
  • Ensure that best practice financial planning is adopted and adhered to by all divisions and support functions in the company 
  • Prepare company’s financial budgets, plans and forecasts 
  • Highlight issues, variances and risks, and recommend remedial action where necessary
  • Work with divisions and support functions to increase levels of financial awareness and capability
  • Liaise with external and internal auditors
Accounting
  • Establish effective and rigorous policies and standards in the Accounting Department
  • Maintain accounts receivable and payable, general ledger, fixed assets accounts and employee compensation records to provide accurate statements of the company’s financial position
  • Manage an employee compensation service to ensure that payroll and related benefit activities are provided in a timely and accurate manner
Treasury and Investment
  • Establish an effective and rigorous policy on all Treasury matters
  • Manage short term working capital and investments to maximize return to the business
  • Manage cash flows of the business to ensure that cash requirements can be met effectively 
  • Provide investment support
  • Monitor cash investment and generate reports 
  • Negotiate and establish advantageous banking and credit facilities with banks 
  • Control and manage company’s foreign currency exposure 
  • Insure company assets and contingencies & liabilities are covered in line with good practice
Level 3 Financial Planning, Budgeting and Control Functional Statements
Financial Policies and Procedures
  • Develop and maintain financial policies and procedures, and costing standards
  • Define financial Key Performance Indicators (KPI) in coordination with the Financial Monitoring and Analysis Department
  • Provide financial guidelines related to all company investments, divestitures and capital expenditures
  • Develop, maintain, review and update financial regulations and authority definition
Financial Planning, Monitoring and Analysis
  • Assist divisions and support functions in developing financial plans and consolidate submitted financial plans 
  • Develop company financial plan (revenues, prices, costs, investments)
  • Develop guidelines for capital allocation process in cooperation with the Financial Policies and Procedures Department
  • Forecast company financial performance
  • Provide support to the Strategic Planning Department on developing the long-term strategic plan
  • Develop financial performance evaluation process
  • Benchmark overhead costs
  • Measure financial KPI’s against targets
  • Analyze KPI variances (target versus actual) and provide solutions and recommendations to the Management and Board of Directors
  • Implement controls of Support Functions and measure spending against benchmarks
  • Maintain cost accounting standards
Budgeting and Control
  • Set budgeting policies and processes
  • Consolidate divisions and support functions’ budgets and develop master budget
  • Assist divisions and support functions in developing capital, operating and manpower budget and consolidate their budgets
  • Monitor utilization of the budget
  • Prepare budget reports and review with Internal Audit Department
Financial Reporting
  • Develop and maintain internal financial reporting processes
  • Collect and consolidate financial information from divisions and support functions
  • Develop and prepare management information reports, financial statements and statutory reports for presentation to Management, Board of Directors, and auditors
  • Liaise with the Internal Audit Department and external auditors and arrange audited financial statements
Level 3 Accounting Functional Statements
General Ledger
  • Carry out monthly, quarterly and end of year closing
  • Conduct daily book-keeping and perform bank reconciliations
  • Perform cost allocation
  • Generate internal accounting and costing data and reports
  • Develop, maintain and control chart of accounts
Accounts Receivables
  • Implement and monitor credit policies
  • Receive payments
  • Handle company sales collection and collection of bad debts which have surpassed a certain amount of days
  • Perform payment/ billing reconciliation
  • Generate reports on accounts receivable
Accounts Payable
  • Process invoices and payments
  • Reconcile purchase orders/ receipts
  • Generate reports on accounts payable
  • Archive invoices and payment orders
Payroll
  • Generate salaries, benefits and pensions payments
  • Check accounting entries
  • Generate payroll reports
  • Liaise with the Financial Systems Support Department for payroll production
Fixed Asset Accounting
  • Control and classify assets
  • Calculate depreciation
  • Track assets/equity and non-cash investments (conduct post-analysis of non-financial investments)
  • Keep records of all investments including capital expenditure projects
  • Ensure correct project closure and asset capitalization
Level 3 Treasure and Investment Functional Statements
Cash Management
  • Manage daily bank transactions
  • Monitor service levels and bank fee structure
  • Provide forecast data to Treasury to enable cash management
  • Handle daily cash requirements
Investment Support
  • Develop guidelines to evaluate investment opportunities
  • Support and advise the Business Development Department in new investment opportunities
  • Provide support to major capital projects and acquisitions/disposals
Treasury
  • Select suitable banking partners and manage relationship with them
  • Evaluate and approve investment instruments
  • Manage overall company funding requirements
  • Manage capital structure of company
  • Identify and manage foreign exchange, interest rates and other counterparts risk exposure
  • Hedge transactions and execute foreign exchange/ interest rate contracts
  • Produce treasury reports
Insurance
  • Identify risk and insurable interest
  • Select suitable insurance partners
  • Identify insurance policies, review and follow-up insurance terms and condition and risk exposure
  • Prepare insurance contracts in coordination with Legal Department
  • Handle claims and follow-up on claim status
  • Handle any specific insurance accounting
  • Plan tax and estimate tax adjustments in accordance with tax legislation
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