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Executive Summary

The trend of globalization brings tremendous changes to the running of organizations. Globalization is unavoidable. Therefore, organizations must lead by making changes in all areas to cope with the dynamic environment. Progressively, financial managers will have to oversee the financial departments. The role of the finance manager entails ensuring that there is harmony between the various departments of an organization. Chief financial officers (CFOs) face a wide range of issues and must ensure that their planning and operations recognize the micro and macro environments. The financial department is a core function that devises mechanisms to evaluate critical decisions meant to bring changes in the organization. This macroeconomic environment has challenges that financial managers have to confront. The challenges include globalization, regulations, technology, risks, transformation, strategy, talent and capabilities, stakeholder management, and reporting. To face this turbulent environment, there is a need to have appropriate, new skills for those professionals who manage the finance functions in an organization. Companies need to have strong guidance from the finance function to survive in this dynamic environment. Therefore, this paper analyses the challenges that financial managers face in the macroeconomic environment and their impacts on the business. 

Challenges Faced by Financial Managers

           Fast-changing and challenging environments continue to broaden the role of financial managers. Financial managers have various responsibilities such as financial planning, capital structure, and budgeting, utilization of funds, procurement of cash, financial control, and financial reporting. The other role of the financial manager is to communicate professionally to investors and the board. Changes in the macroeconomic environment influence operations of the business and as a result, there are considerable changes in strategies and priorities (Ilie, 2015). When the economic system, business, and interaction between the economic players become complex, the role of the financial manager also becomes challenging. Corporations have to be at the forefront of adapting to changes in all relevant areas to cope with the changing environment. Therefore, this paper aims at critically analyzing challenges that financial managers face in the macroeconomic environment and their impact on business operations. 

Challenges for Financial Function

           Chief financial officers (CFOs) share their experience on how they transform their financial departments to better respond to the needs of the organization by addressing the challenges. Some of the main challenges that the financial manager meets in the changing financial conditions include globalization, regulations, technology, risks, transformation, strategy, talent and capabilities, stakeholder management, and reporting (Ilie, 2015). The finance manager has to design roles to suit changing time zones, cultures, and languages. 

Globalization

           Even though globalization does not appear to have caused an increase in the financial market, the absence of enough regulatory framework and times of financial market volatility can severely influence macroeconomic steadiness in the affected markets (Ilie, 2015). Globalization is a complex environment that needs extra effort for one to integrate global customers. The role of the financial manager in globalization comprises establishing and managing virtual offices. Additionally, the role of the CFO lies in his ability to select wisely the business models and assessing their applicability in various circumstances to provide valuable financial input into the business. 

Regulations 

           Harmonizing regulation across borders depends on the rate at which rules change. Therefore, the finance officer must be able to cope with the regulatory changes. CFOs can influence policy and regulatory processes on behalf of their organizations (Ilie, 2015). Regulations comprise challenges that comply with investor demands. These rules range from reporting standards to a particular regulatory department. Dynamic finance managers must work hard to eliminate weighty regulatory procedures and ensure that the organization only embraces relevant regulations. 

Technology

           The function of the finance director is to ensure that data revolves. There is a lot of information available for collection and complex software to complex data. Once the finance function applies the available technology properly to collect, organize, and standardize data, the organization can have an effective business (Ilie, 2015). Proper use of technology reduces the time spent on searching data and allows enough time to connect information, providing valued input in the decision-making process and elucidating the effect on the business (Kenealy, 2010). However, finance managers face many problems in analyzing big data. The major challenge is leveraging the use of technology to realize positive outcomes. 

Risk

           The role of the finance manager is not only to save costs but also to manage risks. However, their main challenge is risk management in a highly volatile environment where the financial manager must proactively approach the diverse risks to protect business assets (Ilie, 2015). The manager must also prevent bad behavior that can erode value and ensure that there are right policies in the activities concerning investments funds availability and shareholder return. 

Transformation

           There are two levels of the transformational finance function. The first level relates to outsourcing and shared services while considering the complex atmosphere and the need for diversified skills (Ilie, 2015). This level of transformation brings risk to the business that the finance manager has to manage carefully. The second level relates to the rest of the finance function that requires efficient analysis. These transformations should motivate the finance leader in changing priorities. The finance manager must structure how the finance department delivers its functions (Iyer-Ahrestani, 2015). 

Talent and Capability

           Some of the main challenges facing chief financial officers include: (1) operations developed abroad making CFOs work with talents from diversified cultures. (2) Diverse skills required to respond to the complicated finance function, and (3) integrating virtual teams using advanced technology (Ilie, 2015). These challenging situations change the profile of a finance manager from a finance specialist to a person with a lot of viewpoints and skills. 

Strategy

           In this modern world, organizations must embark on supporting their goals to ensure the smooth operation of the whole business. The organization’s harmonization and prioritization of activities should happen from the perspectives of the finance manager’s strategy (Ilie, 2015). The CFO must connect the finance-specific operations and analysis productions to the reality of the enterprise assisting in the strategy formulation and implementation procedures.   

Stakeholder Management

                      The finance manager must demonstrate financial leadership, controllership, and become a strategic partner to the chief executive officer. Chief finance officers are part of the management team; hence, they must bring their input to help in making strategic decisions (Ilie, 2015). The CFOs must have good communication skills since they have to communicate with banks and investors. The finance manager must also have the accessible language to the media, board, and clients. 

Reporting

           The finance manager has various tasks besides achieving financial goals. Some of their functions outside the sustainability parameters include social and environmental objectives. These functions change how to make decisions and measure performance (Ilie, 2015). The finance manager has to report finance situation by measuring and reporting performance on financial metrics, social, and environmental. 

Impact of the Challenges on Business Operations

Finance manager challenges impact business operations in various ways. First, the finance manager must decide on the amount of cash required, when, how to get the required funding, and how best they use the available funds (Nielsen & Thomas, 2020). The role of the finance manager is to invest, make financial planning, and finance. Since the main work of the financial manager is to maximize the value of the firm, failing to tackle the dynamic challenges can result in long-term effects on the organization. Second, a finance manager who cannot meet the design roles to suit changing cultures and time zones may make the organization fail to succeed in the global markets. Other than that, the global technology requires agile leaders who are capable of managing large amounts of data, failing to rework data to match the trends in business operations may result in negative technological outcomes (de Waal, Bilstra & De Roeck, 2019). Moreover, if the company fails to follow business policies and regulations, it might face legal battles in the court that can derail the normal operations of the business. 

Furthermore, risks often work against the aggressiveness of commerce to reduce costs in operations. Poorly managed risks may result in low returns for shareholders and capital investment, which might hinder financiers from investing in the company. If the finance manager cannot locate a business in low costs areas and standardize its operations to drive costs down, the organization may fail to compete with others and keep up with the rest. 

Conclusion

           This paper discussed numerous challenges faced by financial managers. The evidence in this paper shows that businesses operate in a dynamic and uncertain economic environment that requires agile financial leaders. The changing macroeconomic environment makes the organizational structure becomes complex with advanced processes that integrate technology to gather, analyze, and report crucial financial data required in the process of decision making. This kind of situation puts pressure on the financial managers to allocate resources and balance long-term and short-term strategies. Many implications are on skills required to face challenges, which makes the career path in finance and accounting change directions. If these challenges are mishandled, they may result in negative outcomes in global and local businesses. The changes in global finance are presenting new skills and experiences that require ambitious finance personnel. A financial and accounting career in this dynamic world is a challenge and an opportunity for specialists looking for an inspiring experience. All the identified priorities in this article will help in transforming and shaping the future operation of the finance manager.