Careers in financial operations
Financial operations is the engine room of a business, ensuring its core functions are able to operate. Typically, this unit manages many different financial aspects, from how bills and people are paid, to reconciliations, and preparing financial statements.
Some areas that financial operations is responsible for include:
- accounts payable
- accounts receivable
- payments and invoicing
- tax planning
- profit and loss monitoring
- investor relations (for public companies)
In most companies, a lead accountant is responsible for the various functional units within financial operations. That position typically reports to the chief financial officer or chief operations officer.
Functions within financial operations
While each business operates and organizes itself differently, financial operations generally falls into 3 broad areas:
Responsible for maintaining the financial health and performance of the organization. This area ensures that the basic financial functions are met, and that cash flow is adequate to cover expenses. Accounting also prepares financial statements on the company’s ongoing operations, providing key stakeholders, shareholders—and if applicable the public—with an accurate view of the company.
Often responsible for tracking transactions, maintaining investor databases, and preparing various reports. These reports and the accompanying analysis, can help senior leaders make key decisions about investments, spending, and progress towards financial and other goals.
For larger companies, financial operations professionals may be embedded in different business units, or focused on specific functions. For example, companies may have accounts payable or payroll specialists within their manufacturing or sales units. These employees have specialized knowledge of the systems and operations which are unique to certain divisions or units. They may report to unit heads and central finance officials. In addition, some specialists work centrally, focusing exclusively on a specialized financial function, such as regulatory compliance, tax management, or auditing.
Departments within financial operations
Some of the specific departments within a financial operations unit include:
When a company commits to purchasing goods or services, it is treated as a financial liability, typically a short-term one. The accounts payable department is responsible for accurately managing what is owed to suppliers, making sure that payments are approved, and processing and disseminating fees.
Tracking information about accounts, such as amounts owed, and when payments are made and to whom, is also an essential role of the accounts payable department.
Among the core job functions are:
- reviewing and recording invoices, prioritizing which to pay first, reviewing statements submitted by vendors or suppliers, and ensuring that invoices, packing slips and purchase orders match
- routing invoices to the appropriate people to approve and sign off on payments, and ensuring that these approval processes take place in a timely matter
- making payments via manual checks, wire transfers, or automated clearing house (ACH) methods
- managing vendors, including tracking W-9s, helping staff with required work to approve new vendors, and monitoring vendor accounts to ensure timeliness
Accounts payable departments serve a vital function. They ensure that good relationships are maintained with suppliers, keep accurate records of payments, and check for mistakes or fraudulent activity.
On the other side of the ledger sheet are accounts receivable, the department that deals with funds owed to a business by its customers or clients. These units play a vital role in ensuring that cash is coming into the business, and that delinquent accounts are flagged and addressed quickly.
They are the total payments due to a company that have been promised by customers, either through payment agreements, credit terms, or other negotiated contracts.
Accounts receivables are listed as assets on a balance sheet. They are the total payments due to a company that have been promised by customers, either through payment agreements, credit terms, or other negotiated contracts. Put simply, accounts receivables are the collective IOUs that a business has accumulated.
Along with cash, accounts receivables are one of the main types of business revenue. Keeping track of and monitoring these payments is a very important area of financial management.
Key tasks of an accounts receivable professional include:
- creating and sending invoices
- maintaining accurate records of payments and outstanding amounts owed
- interacting with customers to resolve outstanding payment issues
- addressing customer disputes on invoices
- helping with collections on past-due accounts
- extending credit to new and existing customers
- reviewing credit policies
- tracking payments made against those invoices, reconciling account statements and overall receivables
- producing reports on the status of individual accounts, and of accounts receivables as a whole
The goal is to collect payments as quickly as possible. Sometimes accounts receivables departments take on the unpleasant tasks of collections, either directly or by outsourcing to a third party.
Reconciliation is an important accounting function within financial operations. It is the process of comparing transactions and other financial activities against the documentation provided to support those steps.
These activities are essential to provide validity to the myriad of payments made and received, validating the financial activity within a company. They also help to detect mistakes and fraud, whether intentional or not. For example, reconciliation might identify a case where a bill was paid twice, or when unauthorized changes were made to a transaction.
Public companies are obligated to reconcile balance sheet transactions and accounts to ensure there is no material misstatement of a company’s financial condition.
Reconciliation requires the following steps:
- going through accounts in the general ledger to verify that balances are accurate and complete
- comparing general ledger account balances to supporting documentation, such as credit card or bank statements, third-party data, or independent systems
- investigating discrepancies and taking necessary corrective action
- documenting and storing information discovered, analyses done, and actions taken for audit purposes
Payments and invoicing
Many businesses do not operate through cash transactions. Instead, they use invoicing, purchase orders and credit, both to pay for goods and services and to offer their own to customers.
Generating invoices for products and services that customers have ordered is important. This process allows a business to document the customer, address, contact information, and, most critically, the transactional information about the purchase, including:
- item or service description
- date purchased
- date delivered
- amount due, including taxes and fees
- date due
- information about fees related to late payments
Payments made to a company’s vendors for goods and services are equally critical. Ensuring that these payments are made in a timely fashion allows a business to avoid fees, stay creditworthy, and remain in good standing.
While some businesses embed payment and invoice functions within accounts payable or accounts receivable departments, others have specialized staff responsible for these tasks.
Payroll is how a company ensures their employees and contractors are paid. Whether employees get a salary or hourly wage, and whether this is received weekly, biweekly or monthly, they expect consistent payment for work completed.
Payroll departments manage the key functions of paying people, often working with an external payroll provider.
Payroll staff deliver checks, either via the mail—or more commonly today—direct payments to bank accounts. They also ensure that deductions for employee benefits, taxes, and other records are tracked accurately.
Who should work in financial operations?
Ideal employees in this area are extremely organized and detail oriented. These positions do not require an excessive amount of education, but it helps if you have an almost innate ability to keep things structured and neat. If you meticulously divided notebooks and folders with color coding and dividers at high school, then a job in financial operations may be the perfect fit. Individuals who are good with numbers, patterns, and analysis, also tend to be successful in this area.
In addition, financial operations positions might appeal to people who:
- are looking for an entry-level career in finance, perhaps prior to pursuing a CPA
- do not want a high level of stress in their jobs and prefer a 9 to 5 position
- are seeking a reliable, steady career in a profession that does not require excessive academic prep
Where financial operations professionals work
Financial operation professionals can be found in any entity which deals with money. These professionals are commonly employed in the following types of agencies.
- Accounting firms that outsource services, including financial operations, to third parties. The compensation may not be as good as with in-house positions, but these are great places to learn the trade.
- Companies with in-house accounting functions. These positions usually offer the best pay, but are also the most intense working environments.
- Federal and local government agencies, which provide lower stress but more bureaucracy.
Those considering a career in financial operations should be aware that some jobs are becoming automated, with traditionally human-based tasks being replaced with sophisticated accounting software programs. Therefore, in the medium term, some of these jobs may be at risk. Regardless, the U.S. Bureau of Labor Statistics predicts that financial operations jobs will increase by 8% between 2020 and 2030, compared to general job market growth of 7.7%.
General education requirements
It is possible to enter financial operations with just a high school diploma. But those who wish to climb the seniority ranks or switch to a more lucrative operations role usually complete a degree.
On occasions, a degree can be earned in tandem with the job, although typically it is acquired before a candidate enters the industry for the best possible chance of landing that initial financial operations position.
While some financial operations professionals start out with just an associate’s, a bachelor’s degree in accounting or related field is still preferred for most positions, including entry-level roles.
Some candidates choose to take a 2-year associate’s degree. This gives them a grounding in their sector of choice, and is less of a commitment than a 4-year bachelor’s degree. If they later decide to pursue a bachelor’s, the credits earned during their associate’s can usually be transferred. However, be sure to check the transfer rules on prospective programs as these can change depending on the jurisdiction.
Depending on the financial operations role they are pursuing, candidates can choose from the following associate’s degrees:
- associate’s in accounting
- associate’s in banking and finance
- associate’s in business
- associate’s in economics
- associate’s in finance
- associate’s in financial services
Before choosing an associate’s, it is important to consider the area of financial operations you would like to enter. For example, if you plan on becoming a bookkeeper, an associate’s in accounting can increase your employability more than another associate’s on offer.
While some financial operations professionals start out with just an associate’s, a bachelor’s degree in accounting or related field is still preferred for most positions, including entry-level roles. While further certifications can be acquired on the job, a bachelor’s puts you in the best possible position to secure your first position in the industry and quickly climb the seniority ladder.
Careers options in financial operations
There are various jobs within financial operations. Below we look at some of the most common. Note that many of these can be considered interchangeably, depending on the business.
Usually one of the lowest-level positions in a financial operations department, accounting clerks are often trained on the job. From here, they can be promoted to junior accountant or accounting assistant, which usually require a bachelor’s degree in accounting or related field. After this, a frequent career track is moving from junior accountant to auditor, and then finally to CPA.
Some typical tasks and responsibilities of an accountant clerk include:
- posting financial transactions
- receiving and recording checks, cash, and vouchers
- entering debits and credits into databases or software applications
- reconciling and reporting on discrepancies
This position is a step above a clerk. Theoretically, accounting assistants only require a high school diploma, but most have at the very least a technical degree or 2-year associate’s. Some businesses prefer their accounting assistants to have a bachelor’s, ideally in accounting or a related field.
Job responsibilities include:
- organizing bookkeeping processes
- assisting accounts with building and editing financial documents
- tracking expenses and budgets
- creating financial presentations
- reconciling financial books
A payroll clerk is responsible for helping to make sure staff get paid by collecting the necessary information and delivering paychecks.
Job duties include:
- collecting employee payroll data and timesheets
- managing payroll information
- updating payroll records
- resolving payroll discrepancies
- calculating payrolls, including taxes, benefits, and other payments
This position only requires a high school diploma. To improve your chances in the job market, it is possible to take a certificate in bookkeeping or payroll administration. These can be completed either prior to starting the role—or if you have already secured the job, as on the job training. A payroll clerk can then improve their knowledge and status within the field by getting certified by the American Payroll Association.
Note that some firms prefer to employ candidates with an associate’s or bachelor’s degree in accounting or a related field. This is certainly something to consider, because with the right qualifications and experience, there are opportunities to move into mid-level and senior versions of this role.
The main role of a bookkeeper is overseeing transactions and reconciling them via accounting software. This position is often popular with financial operations staff who wish to work remotely.
Some typical bookkeeping tasks include:
- creating financial reports
- documenting transactions
- reconciling financial data
- monitoring and updating the general ledger
- tracking payroll information
A high school degree can provide the basic skills needed to start out in bookkeeping, such as math, communication, and writing. Candidates with an associate’s or bachelor’s degree in business administration or accounting may find it easier to climb the seniority ranks. They can also find themselves working with more prestigious clients.
There is potential to earn more as you move up the seniority ranks. Freelance bookkeepers frequently charge between $40-60 p/h.
Next steps for financial operations workers
Financial operations is a great first step in finance. It’s an area where many ambitious young professionals gain experience while studying to achieve CPA status. After a few years in financial operations, many go on to pursue a role in financial controls.
This professional organization resulted from the merger of organizations focused on accounts payable, accounts receivable, purchasing and payables, and work process improvements.
Among other services, this association offers training, certification, and licensing for bookkeepers.
Provides education, information and advocacy for accounting professionals.