Corporate Finance: Overview
A career in corporate finance means you would work for a company to help it find money to run the business, grow the business, make acquistions, plan for it's financial future and manage any cash on hand. You might work for a large multinational company or a smaller player with high growth prospects. Responsibility can come fast and your problem-solving skills will get put to work quickly in corporate finance.
The job of the financial officer is to create value for a company. For example, the finance group at American Electric Power of Columbus, Ohio has four main areas of concentration: liquidity, flexibility, compliance with laws and regulatory support. The goals of the objective are met through four main activities carried out by AEP's Finance Department: 1) designing, implementing and monitoring financial policies, 2) planning and executing the financing program, 3) managing cash resources, and 4) interfacing with the financial community and investors.
Jobs in corporate finance are also relatively stable while performance in these jobs count. But it's not like your job is going to depend on whether you're selling enough this week or getting good deals finished this quarter. Rather the key to performing well in corporate finance is to work with a long view of what going to make your company successful. Many would argue that corporate finance jobs are the most desirable in the entire field of finance.
Some of the benefits of working in corporate finance are:
You generally work in teams which help you work with people
It's alot of fun to tackle business problems that really matter
You'll have many opportunities to travel and meet people and
The pay in corporate finance is generally quite good.
Corporate Finance: Skills and Talents
Different jobs and companies call on different skills from the corporate finance professional. A typical job in corporate finance would call for the following skills:
Puzzle-lovers Wanted
Most corporate finance jobs involve solving problems using a combination of intuition and analytics. If you are good at problem-solving, this may well be the job area for you.
Are You a Forrest Gump Type?
Many of us imagine working in a corporation as a boring, routine experience designed for dim-witted, persnickety pencil-pushers in short-sleeved pastel plaid shirts. Not so pal. Rather, you need to be comfortable with ambiguity and rapidly changing environment where tasks change from day to day, maybe hour to hour.
Geek of the Week? Not Really, But...
Lets not avoid the obvious. You have to be computer literate with spreadsheets, word processors, presentation packages and mainframes in corporate finance. This is especially true for entry level positions where you will need to crunch numbers as you get involved in the details of corporate financial planning, accounting and capital-raising. Execs love to talk about strategy, quality and vision. Funny, but when they interview you expect to be asked "Have you ever written a VBA macro in Excel?" or "Have you used a Reuters or Bloomberg station before?"
Are You An Impatient, Entrepreneurial Type?
One of the most common complaints among new entrants in corporate finance jobs is that they are surprised by the low level of the work. "I didn't go to school to do this..." is a common refrain. Keep in mind that corporate environments reward longevity and loyalty. Be patient, learn from mentors and invest in yourself along the way. If you complain early on you may never get the break you want that comes from doing a minor task particularly well.
Why Do Nice People Get the Good Jobs?
The movies portray "killer" operators in corporate environments, getting ahead by manipulation and chicanery. This isn't exactly how it works. People who like people, can communicate their ideas, build deep networks and are passionate about their work get ahead.
Leader or Follower?
The number one attribute most corporate employers are looking for is initiative. If you can give examples in interviews of situations where you did something plain useful even though no one asked you to, you will be a hot commodity. Have you ever started a business? Or put together a social event that brought people together? Or started a new organization?
Speak a Foreign Language?
Large corporations in the U.S., Europe and Asia are more globalized than ever and jobs will often take you across borders. You will obviously be more desirable to a company if you have a command of at least one foreign language and knowledge of international corporate finance. Would you be comfortable managing a bank relationship for your company in Argentina? Or costing new plants in China?
Risky Business
The last decade has seen a dramatic increase in the sophistication of corporate risk management strategies. How are we going to hedge against fluctuations in the cost of our inputs? And what should we do to protect against foreign currency fluctuations? If you are familiar with models, techniques and derivatives which can be used to manage risk, you will be in high demand.
Did You Ever Build Something?
Manufacturing firms often hire corporate finance types with a background in engineering. Ford, for example, wants people in the factory who can understand complex manufacturing processes, communicate well with engineers and enjoy complex costing work. Jerome York, the former Chrysler CFO, did a stint running Dodge, and once worked designing engine parts for GM.
How Are You With People?
The best financial professionals are good with people. According to Fortune, (11/18/95): "Their biggest weakness is a lack of people skills," says John Dasburg, CEO of Northwest Airlines. "Finance types are often curt and colorless. By contrast, the best CFOs are master persuaders with a streak of the sales person. They read people as surely as balance sheets."
Corporate Finance: Job Options
Treasurer
Duties involve supervision of Treasury department which is involved in financial planning, raising funds, cash management and acquiring and disposing of assets. This is an upper management job which requires both analytical skill and the ability to manage and motivate people.
Financial Analyst
Duties involve determining financing needs, analyzing capital budgeting projects, long-range financial planning, analyzing possible acquisitions and asset sales, visiting credit agencies to explain firm's position, working on budgets, analyzing competitors, implementing financial plans, monitoring the the market price of your firm's securities analyzing of leasing agreements and determining needs and methods of dealing with derivatives. Often you will be assigned to a specific area such as revenue, planning, capital budgeting or project finance. This challenging job requires good analytical skills, computer skills and a broad understanding of finance.
Credit Manager
Duties include establishing policies for granting credit to suppliers, setting guidelines for collecting on credit and considering whether to securitize receivables. This job requires knowledge of the customer and ability to analyze accounting statements.
Cash Manager
Duties involve establishing relationships with banks, managing short-term credit needs, ensuring that sufficient cash is on hand to meet daily needs, putting excess cash into a concentration account bearing interest and handling international transfers of funds. This job is detail-oriented and requires good ability to negotiate.
Benefits Officer
Duties involve managing pension fund assets, setting up employee 401(k) plans, determining health care benefits policies and working with human resources to set up cost-effective employee benefits. This job requires a combination of finance knowledge, knowledge of human resources management and understanding of organizational behavior.
Real Estate Officer
This job involves finding real estate locations for a company, negotiation of lease agreements, acquisition of real estate and valuation of properties. This job requires a thorough understanding of finance and real estate.
Investor Relations Officer
Duties involve dealing with the investing public by disseminating financial information, responding to queries from institutional investors, issuing press releases to explain corporate events and organizing teleconferences with investors. This challenging job involves contacts with top-level executives and requires understanding of finance and public relations. Many who hold this job have backgrounds in PR or advertising.
Controller
Duties involve financial planning, accounting, financial reporting and cost analysis. Will get involved in property, revenue, benefits, derivatives, lease and joint interest accounting. May need to develop forecasting models to project revenues and costs. May be called on to implement or work with a complex costing system, efforts at financial reengineering, transfer pricing issues or interface with auditors. This job requires extensive accounting experience. Often holders of this position enter a company from a Big Six accounting firm.
