June 5, 2015
In our previous blog on Corporate Finance we discussed what is corporate finance, features of corporate finance and career prospect in corporate finance. In continuation with that we’ll discuss the career path in corporate finance, few profiles in detail and skill-sets required to get into these profiles.
In the following diagram, we have tried to identify various job profiles available at different stage of career progress.
1. Entry Level: Typically a bachelor degree in finance or economics is required to get an entry level job in this field. You’d have an upper edge if you possess a strong communication and analytical skill. Besides your proficiency in MS Office package (usually MS excel, MS word, MS power point) is essential, though it can be learnt on the job if you have elementary knowledge.
2. Mid Level: Academically you are expected to hold an MBA in finance or a Chartered Accountant (few companies are particular to have CA degree acquired in first attempt or even rank holders). Along with all entry-level requirements, you should have demonstrated high quality performance, attention to detail and decision making capabilities among available choices.
3. Senior Level: In addition to mid-level requirements, one should have developed solid management skills, track record of excellent leadership abilities, and deep understanding of macroeconomic factors. You should have advanced from having good communication skill to persuasive capacity and become comfortable in taking decisions involving very large sum of money.
Let us now talk about few particular job profiles which are presently in demand in the job market.
– Capital Budgeting: Estimate revenue for annual budget and study the most recent monthly and quarterly performance against forecasts. Look at actual results vs. projected figures, and investigate reasons for variances. Assess capital proposals and lease vs. buy decisions -whether to acquire a new piece of equipment, and then decide whether to lease or buy.
– Different Projects: For example, performing a competitive peer analysis, analyzing the component costs to decide whether it is better to manufacture them in house or to procure them from outside, valuing a prospective acquisition, determining the viability of entering a new market, and identify the best price for a new product launch.
– Industry Specific: Within various conglomerates, a financial analyst may support one or more brands or product lines, providing financial support for a new product launch or strategy for promotion.
– Manufacturing Industry: Job-order costing, Activity based costing etc; work in a manufacturing plant to understand the costs of products and identify opportunities for cost-reduction and involve in marketing on pricing decisions.
– Service Industry: Generally involve in determining the cost of providing any service and helping to make pricing decisions.
– Investment/ Financing: Evaluate the company’s funding needs and liaise with banks to fill those needs through internal sources or external sources from the capital markets (commercial paper, bonds, equity, etc.).
– Cash Management: This is a company’s piggy bank. The function makes sure the company has enough cash on hand to meet its daily needs, invest any excess cash overnight by picking the best short-term investment options and negotiates with banks to get the best price.
– Risk Management: To safeguard corporate assets by using insurance policies or currency hedges; monitor and manage the firm’s foreign currency and/or commodity exposure.
– Pensions Management: Manage the Company’s retirement funding investment program – individual payment schedule, taking into account pension payments periodicity etc.
– New Business Opportunity: Identify fresh business opportunities from both finance and marketing standpoint; assist team create business case, prepare financial models, and creates presentation for management team.
– Mergers & Acquisitions: You’ll be working closely with the management team and will be involved in valuation model, due diligence activities. You may also be given the task of the integration of acquisitions.
We’ll conclude this topic with a discussion on the skill-sets required to for pursuing a career in Corporate Finance. Following is a list of competencies that are expected from a seasoned corporate finance professional, which also throws some light on the areas that you can start to work on.
• A problem solver: A corporate finance job requires problems solving skills using a combination of data analytics and intuition. If you take pleasure in real life problem-solving, this may well be the area for you.
• Research: Your knowledge level must be decent enough for a comfortable conversation on most of the corporate finance topics. Make the most of iMpact and Kresge Library resources, including Wet Feet Press and the Finance Career Packet, available on reserve.
• Data driven and modeling skill: You’ll have to analyse enormous amount of financial data, accurately and efficiently. You are expected to be extremely comfortable with numbers and data crunching – financial modeling skill is a basic requirement;
• Extensive commercial awareness: You need to be abreast with latest trends in the market; Filter through new streams of market data and convert those to meaningful insight to set guidance for the Company’s future performance. Make it a habit to read as many publications (both international and national) as possible that discuss financial markets and events: Economic Times, Business Today, EPW, New York Times, the Wall Street Journal, Fortune, Institutional Investor, Business Week, Economist and other financial publications.
• Need a set environment? Not for you: The job demands you to be comfortable with ambiguity and a rapidly shifting atmosphere where farm duties change from day to day.
• Communication Skill: Confident and persuasive written/ verbal communication and negotiation skill – must have to handle the corporate vultures (clients);
• Network: The world is running on network and your networking skill with appropriate contacts can just open the doors of opportunities that you have been long searching for in the job portals. Develop the habit of small-talks and get into meaningful conversation with people who matter. Make best use of (though “exploit” would be a better term here) your alumni group, LinkedIn contacts, friend of friends etc. The possibility and impact of clever networking can be profound in your professional career.