Any rational person keeps tracks of his/her expenses and income. Money is the medium of exchange in modern economy and the financial position is a measure of your purchasing power. Similarly, any corporate office has to keep track of its finances, though its complexity and volume of transactions is much higher than an individual’s financial transactions.
Any corporate office has different departments that look after the various aspects of the business. Moreover, finance department is one of the backbone of any business. Recording of day to day transactions ensures that the financial health of the firm is tracked. Moreover, it is the finance department who does the job of measuring financial performance and displaying it to the stakeholders. Every transaction in the company leads to a financial implication. If you’ve rendered the services of any professional, however, not yet paid monetary compensation, it leads to a liability.
Thus, It is not enough that a company markets its products and services. To be successful and solvent, it needs to keep its books in order, decide on appropriate funding, keep its investors happy, pay taxes, evaluate new projects, manage competition, optimize its cash flows, comply with all regulations and generally aim to increase shareholder wealth. No matter what type of firm, every firm has a finance department that takes care of all these matters. All of this is quite a daunting and challenging work and specialists are hired for these roles. In India, Corporate Finance usually means General Financial Management (Not to be confused with Corporate Finance in Investment Banks which actually means Investment Banking services).
Of course, the size of the firm changes depending on the size and the nature of the firm. A complex organization with multiple geographical and/or business segments the finance department may be small or large with several sub divisions. At the very least, Corporate Finance executives have to deal with accounting, financial reporting, taxation and cash management. Risk Management and Treasury Management are sometimes rolled into the corporate finance division, when the firm is small.Corporate Finance therefore is present in every firm as a backbone support function. Apart from this, consulting firms hire corporate finance professionals to help them advise their clients.
A Corporate Finance executive can one day even hope to sit in the CFO’s chair. So the career options are varied and unlimited. The finance department plays a pivotal role in the economy since it is responsible for true and fair reflection of the financial position of the organization to its stakeholders. Ethical issues may result into accounting frauds with disastrous effects since they end up defrauding the investors. Considering this, it is quite important that Corporate Finance Executives keep a vigilant eye to detect accounting frauds.