Meaning of Financial Administration

Financial Management / Administration means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the Diocese. It means applying general management principles to financial resources of the Diocese. According to the Canon Law:

Finance administration Scope/Elements are:
  1. Investment decisions– includes investment in fixed assets (called as capital budgeting). Investment in current assets are also a part of investment decisions called as (working capital) decisions.
  2. Financial decisions – They relate to the raising of finance from various resources which will depend upon decision on type of source, period of financing, cost of financing and the returns thereby.
  3. Objectives of Financial Administration

Functions of Financial Administration.

  1. Estimation of capital requirements
  2. Determination of capital composition
  3. Choice of sources of funds
  4. Investment of funds.
  5. Disposal of surplus
  6. Management of cash
  7. Financial controls
  8. Financial Planning -Determining capital requirements, determining capital structure, Framing financial policies

The External Functions of the Finance Department

The functions of the finance department can be broadly broken down into external and internal financial management. The external function encompasses the entire range of activities to do with paying the suppliers, vendors, and the other stakeholders who do business with the corporates.

The Internal Functions of the Finance Department

The internal functions of the finance department are similarly important wherein it stars the payroll processing and ensures that employees are paid on time. Indeed, payroll is perhaps the most visible interface that the finance department has with the employees.

The Treasury Function

Treasury is all about managing the foreign exchange payments and ensuring that the corporate does not lose money due to fluctuations in the exchange rates. Indeed, as those who have received payments in Dollars or Euros would cash them when the exchange rate is favourable. The finance administrator should ensure that he negotiates favourably during the exchange of foreign currency into local currency.

Similarly, the finance department job is to ensure that the Diocese does not lose out and towards this end, it ensures that hedging and escrow accounts are managed.

  1. The Pension Fund Management and Tax Activities of the Finance Function

The next role of the finance function is in payroll, claims processing, and acting as the repository of pension schemes and gratuity.

The finance function also has to coordinate with the tax authorities and hand out the annual tax statements

  1. Payroll, Claims Processing, and Automation

The other role of the finance function is to process payroll and associated benefits in time and in tune with the regulatory requirements.

The key aspect here is that the finance function must be headed by persons of high integrity and trust that the management reposes in them must not be misused.

  1. Insurance Policy Covers:
  • The administration ensures that all fixed assets are insured.
  • Health insurance; it is the finance function to see that all employs has the necessary insurance policies for health NHIF included and WIBA Among others.

The finance department is like a pump which keeps the fluids of money and commerce flowing through the system.  It can be said that though the finance function is a support function and is away from the limelight unlike the marketing, or the project staff, they are vital cogs in the machine which keep the wheels greased and the Diocese moving.Some people like to call the finance function in corporates as ants who go about their work quietly and diligently.