CORPORATE FINANCE

When businesses are in the process of change, they need accountants to advise how to add value through investment decisions.

Overview

Corporate finance more broadly refers to the practice of how businesses fund their operations while still delivering maximized profits to shareholders. This is done through raising capital (i.e. issuing and selling bonds, equity, or debt to investors), planning and monitoring capital expenditures and cash flow, and determining how a company should proceed with any planned future investments.

Corporate finance professionals are thus responsible for managing their company’s financial activities and capital investment decisions. These decisions can include whether to pursue a proposed investment, how to pay for investments or purchases (e.g. by paying cash, selling securities, or taking out loans, etc.), and calculating how much dividends shareholders should receive.

Because of the broad-reaching scope of work, corporate finance teams tend to be multidisciplinary as a result. Roles range from lead advisors (who project manage the process of raising capital), accountants and auditors, and lawyers; each contributing to a different part of the overall process.

Career Pathways

Most corporate finance accountants typically start off in audit roles, as that tends to be a good way to gain experience on the ins and outs of corporate financing and how to valuate a company’s assets and liabilities. Some professional bodies like ICAEW also offer specific qualifications for corporate finance roles, which may be worth considering as you pursue chartered accountant status.

While lead advisors analyse the external financial landscape to recommend the best and safest ways for a firm to raise capital, corporate finance accountants provide analysis and transactional support for the rest of the team. This includes tasks such as doing capital budgeting, risk analysis, and performing due diligence on potential investment options.

With that said, another key part of corporate finance work is cash flow management. Making investments and taking on new projects is all well and good, but a company must be able to settle all its obligations when the time comes to pay up.

Corporate finance professionals must thus ensure a company has sufficient liquidity – whether through balancing assets and liabilities, having enough cash on hand, or securing sufficient credit lines for the company.

Some corporate finance roles may require detailed knowledge of the area of business which the company inhabits. For example, raising capital and managing liquidity for a tech company is a very different ball game than doing the same for an oil and gas company. You will have to pick up such sector-specific knowledge as you advance in your career, and it is not uncommon for corporate finance professionals to end up specialising in particular industries later on in their career.

Corporate finance roles can typically be found under a company’s inhouse finance department, or with banks and investment funds. Given the critical and sensitive nature of this work, pay for such roles can be on the high side, though it is also one of the more high-pressure areas of accounting work in exchange.

Required Skills

Strong communication skills are essential in corporate finance, as professionals must effectively communicate with a wide range of stakeholders, including senior management, investors, and regulatory agencies.

Teamwork skills are crucial as well, since you will be working in teams of multidisciplinary professionals. You must be able to collaborate effectively with team members from both finance and non-finance backgrounds in order to achieve your shared goals.

Having a good eye for detail and keen problem-solving skills is also a must. You must be able to identify and hedge again potential problems before they arise. This is especially critical in capital budgeting, as excessive investing or under-funded investments can have huge negative effects on the company’s immediate financial standing.

Other important traits include confidence – since you need to be both influential and persuasive when making deals with external parties or conveying financial management strategies to internal staff, good numeracy skills, and the resilience to work long hours under a high degree of pressure.