The role of the finance function - OCRFinance function influence on business activity

As well as providing financial information to other departments to assist in business decision-making, the finance function can influence business activities by providing advice on various financial issues. For example, the finance function may be able to offer advice on the sources of finance that are available to a business, or it may be able to suggest ways of improving cash flow. The finance function also makes a significant contribution to business plans.

Supporting business decisions

Businesses may require financial information relating to many different issues and decisions. These may include:

• A marketing campaign – the finance function may set a budget for the marketing function to ensure that it does not spend money that the business cannot afford. During and after the campaign, the finance function may provide sales and profit information to review whether it was a success.
• Business growth – when they make decisions about the best way for a business to expand, managers will rely upon the finance function to provide information. This information may cover sources of finance as well as costs, break-even point and any forecasted changes in sales.
• Economic change – a change in the external environment, such as a recession, may require advice from the finance function about how the business can reduce its costs or improve its cash flow to ensure that it is able to survive.

Each of these decisions – along with many others – highlight the importance of all functional areas of a business working together. They show the interdependent nature of business.