Discussing the Subsidiary Functions are follow – Decision making, Innovation, Representation, Reporting, Budgeting, and Forecasting. After that discussing the Functions of a Finance Manager. The functions are – 1) Financial Forecasting and Planning, 2) Acquisition of Funds, 3) Investment of Funds, 4) Helping in Valuating Decisions, and 5) Maintain Proper Liquidity. Also learned, The Features of Directing Function of Management! Discuss the Subsidiary Functions of Management!
Learn and Study, Discuss the Subsidiary Functions of Management!
Besides the primary functions of management, below are some of the important subsidiary functions:
#Decision making:
Joseph L. Massie regards decision-making as the first important separate function of management. An important job of a manager is decision-making. Every day he has to decide about doing or not doing specific work. Decision-making is the process of choosing the best from among alternatives courses- of action, evaluation of alternatives and choosing the best. However, it may be. Appropriate to cover the function of decision-making under the planning function of management.
#Innovation:
Ernest Dale has given innovation as a separate function of- management. According to him, management involves the introduction of new systems, procedures, methods, techniques, products, and services. However, it is not right to regard innovation as a separate function of management. Because innovation is very much a part of planning function.
#Representation:
Ernest Dale has regarded representation also as a separate function of management. According to him, a manager has to represent his organization to outsiders, financial institutions, government, and others. He has to keep good relations with these agencies with a view to attaining the enterprise objectives. However, this function falls under organizing and directing functions of management.
#Reporting:
Luther Gulick has suggested reporting as a separate function of management. The process of giving information to the management/shareholders is considered as reporting. The reports are regularly sent to various levels of management for judging the effectiveness of different responsibility centers. These reports also become a base for taking corrective actions, if necessary. However, it may not be appropriate to consider reporting as a separate function. Because it is very much a part of controlling function of management.
#Budgeting:
Luther Gulick has also given budgeting as a separate function of management. A budget is a future plan represented in a numerical form. Budgeting is preparing various budgeted figures for the enterprise for the future period. Then comparing the actual results with the budgeted and taking corrective action in the future so as to achieve the optimum results. Nowadays, budgeting has become a very important function of management but it is only a technique of planning and controlling.
#Forecasting:
Lyndall Urwick regards forecasting as a separate function of management. According to him, forecasting is involved to some extent in every business decision. The management has to forecast while preparing plans for the future. According to Henry Fayol, the entire plan is made of a series of separate plans called forecasts. Forecasting provides a logical basis for preparing the plans. However, it will be proper to cover forecasting under the planning function of management.
#The Functions of a Finance Manager:
Now Explain it:
#Financial Forecasting and Planning:
A financial manager has to estimate the financial needs of a business. How much money will be required for acquiring various assets? The amount will be needed for purchasing fixed assets and meeting working capital needs. He has to plan the funds needed in the future. How these funds will be acquired and applied is an important function of a finance manager.
#Acquisition of Funds:
After making financial planning, the next step will be to acquire funds. There are a number of sources available for supplying funds. These sources may be shares, debentures, financial institutions, commercial banks, etc. The selection of an appropriate source is a delicate task. The choice of a wrong source for funds may create difficulties at a later stage. The pros and cons of various sources should be analyzed before making a final decision.
#Investment of Funds:
The funds should be used in the best possible way. The cost of acquiring them and the returns should be compared. The channels which generate higher returns should be preferred. The technique of capital budgeting may be helpful in selecting a project. The objective of maximizing profits will be achieved only when funds are efficiently used and they do not remain idle at any time. A financial manager has to keep in mind the principles of safety, liquidity, and soundness while investing funds.
#Helping in Valuating Decisions:
A number of mergers and consolidations take place in the present competitive industrial world. A finance manager is supposed to assist management in making valuation etc. For this purpose, he should understand various methods of valuing shares and other assets so that correct values are arrived at.
#Maintain Proper Liquidity:
Every concern is required to maintain some liquidity for meeting day-to-day needs. Cash is the best source for maintaining liquidity. It is required to purchase raw materials, pay workers, meet other expenses, etc. A finance manager is required to determine the need for liquid assets and then arrange liquid assets in such a way that there is no scarcity of funds.
