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CORPORATE
FINANCE
Functional Area Description
Job Descriptions
Traditional Corporate Finance
Roles
Divisional Financial Analysis
Corporate Development
and Strategic Planning
Treasury
Cash Management
Roles Sometimes Included
Within Corporate Finance
Taxes
General Accounting
Internal Audit
BBA vs. MBA Job Opportunities
Skills
What We Didn't
Know
Officer
Contact Information
Financial Leadership Rotation Program at Nationwide
Informational Flyer
Functional Area Description
The term "Corporate
Finance" is often used to describe two separate areas: 1) within
commercial and investment banking 2) within in a corporation. This
section pertains to those interested in working in corporate finance
within a corporation. Those interested in corporate finance within
commercial and investment banking should see the investment banking
section.
Corporate finance within a company may be characterized as a combination
of cyclical work (i.e. budgeting) combined with project work. Finance
professionals work on a wide variety of projects which pertain to the
financial needs of their firm, including all financial and cost analysis,
internal audits and Treasury functions. A career in corporate finance
often provides intellectual challenge in a fast-paced environment.
Management of people and processes can be seen as rewarding, and the
positioning of corporate finance within a company may be one of power or
prestige. The pay scale for corporate finance jobs is very competitive,
and upward advancement can lead to very senior level management within
the firm. The median Michigan graduating BBA-level full
time corporate finance salary was $45,000 in 2000. The median Michigan MBA-level full time corporate
finance base salary was $80,000 in 2000. Both the BBA and MBA base salary
is often accompanied by an annual performance bonus and at times stock
options.
Every company has a corporate finance function. People who work in
corporate finance are responsible for managing the money-forecasting
where it will come from, knowing where it is, and helping managers decide
how to spend it in ways that will ensure the greatest return. The
responsibilities that fall under finance can range from basic activities
such as bill paying to very sophisticated activities such as forecasting
the value of a potential acquisition. Careful assessment of the financial
implications of particular strategic decisions can be critical to a
company's success or failure. Of course, a company's size, complexity,
economic sector, and stage of development (start-up or established
business) influence what tasks the corporate finance team undertake every
day.
Corporate finance includes two key functions: accounting and finance.
Accounting concerns itself with day-to-day operations-bookkeeping.
Accountants balance the books, track expenses and revenue, execute
payroll, and pay the bills. They also compile all the financial data
needed to issue a company's financial statements in accordance with
government regulations. Finance professionals analyze revenue and
expenses to ensure effective use of capital. They also advise businesses
about project costs, make capital investments, and structure deals to
help companies grow. In spite of their different roles, finance and
accounting are joined at the hip: The higher levels of accounting
(budgeting and analysis) blend in with financial functions (analysis and
projections). Thus, finance and accounting are often treated as one, with
different divisions undertaking particular tasks such as cash management
or taxes.
As economies continue to intermingle globally, opportunities for
sophisticated financial analysis and planning will only grow. If the
technology industry is any indication, companies will increasingly
complete their own mergers and acquisitions in-house, creating more
opportunities for people in finance who are able to think strategically.
Of course, this also means a greater demand for people with higher
degrees who can develop more theoretical financial models, develop
currency hedges, or estimate another company's future earnings and
current value.
Job Descriptions
> Traditional Corporate
Finance Roles:
Divisional Financial Analysis
In this area, you work with each division's business team to prepare
financial plans, make forecasts, and compare actual financial results to
forecasts. You may also evaluate the financial consequences of
alternative strategies.
Responsibilities include everything from analyzing new business
opportunities to restructuring a business or developing a
capital-spending program. The primary concerns are to find better ways of
using company assets, reduce costs, and research ways to develop better
forecasts. Financial services evaluates the risks versus potential return
of any course of action and develops recommendations so that managers can
pick the most profitable strategies, depending on their goals.
Corporate
Development and Strategic Planning
Corporate development involves both corporate finance and business
development. (For more on these types of jobs, check out our Business
Development career profile.) Finance experts in corporate development
study acquisition targets, investment options, and licensing deals. Often
they assess the best firms to buy or invest in, such as pre-IPO
cutting-edge technology companies with complementary products that could
either extend the company's product line or mitigate a potential future
competitor. Corporate development jobs require planning and analysis
know-how and the kind of skills that investment bankers working
merger-and-acquisition deals put to use.
Treasury
The treasury department is responsible for all of a company's financing
and investing activities. This department works with investment bankers
who help the corporation raise capital with stock or bond sales or expand
through mergers and acquisitions. Treasury also manages the pension fund
and the corporation's investments in other companies. The department also
handles risk management, making sure that the right steps are taken to
safeguard corporate assets by using insurance policies or currency
hedges.
Cash Management
This is a company's piggy bank. The cash-management group makes sure the
company has enough cash on hand to meet its daily needs. The group also
sees to it that any excess cash is invested overnight by picking the best
short-term investment options. And it negotiates with local banks to get
regional business units the banking services they need at the best price.
> Roles Sometimes
Included Within Corporate Finance:
Taxes
Activities in this area involve administering taxes (that is, paying
taxes on time-or finding loopholes to avoid paying them) and planning how
to decrease the company's tax burden. Responsibilities include working
with attorneys on tax litigation, researching tax laws and reporting
requirements by nation (if the company is international), and keeping up
with new government rules and regulations.
Large companies have a whole department dedicated to recommending methods
to minimize the tax impact of any business decision such as a new
division launch, a capital-spending plan, or purchasing a new company.
Investments and pensions also need to be managed with an eye toward
minimizing taxes. The tax department helps structure transactions, makes
recommendations on the timing of acquisitions or sales based on what else
will be written off that year, and can decide what corporate-reporting
structure reduces taxes-for example, creating a wholly-owned subsidiary
versus having an internal division.
General Accounting
General accountants are responsible for producing all the financial
records a corporation uses to track its progress internally and to meet
government regulations. Such workers also gather all the information
needed to compute a company's balance sheet, profit and loss statements,
and income statements. They also track the corporate budget, cash flow,
and pay all the bills.
Your first job in general accounting usually will be in accounts payable
or accounts receivable. Success in accounting might lead you to a
position as a controller, overseeing a larger group, aggregating
information, or working on portions of the corporate budget.
Internal Audit
When most people think of an audit, they think of an outside audit-a
large accounting firm like Arthur Andersen checking the corporate books
on behalf of the shareholders. However, most large companies have an
internal-audit group that regularly visits individual company branches
and checks the company's accounting systems.
Internal auditors perform the investigative and corrective work that
ensures the external auditors don't find anything. The internal-audit
group reviews the quality of the data, making sure it's both accurate and
complete. Internal auditors also evaluate whether the
corporate-accounting procedures are effective and universally followed.
Finally, internal auditors introduce or revise procedures to improve
efficiency and reduce costs.
> BBA vs. MBA Job
Opportunities:
BBAs will have opportunities as Financial Analysts, but may be given
projects that are more limited in scope than their coworkers who have an
MBA and/or additional experience. Additionally, BBAs are not typically
offered positions within Treasury. If you are a BBA, you can demonstrate
your interest in finance with relevant undergraduate courses in
accounting, finance, and economics. Internships are always a great way to
strengthen your résumé and differentiate yourself from other candidates.
Skills
There are certain interests common to individuals in finance, regardless
of their particularly department or area. Solving problems using
quantitative analysis often dominates the profile of individuals in this
field. Corporate financial mangers also enjoy managing projects form
beginning to end, and managing people throughout the process.
Specific skills and interests sought by recruiters include:
- Analytical/problem
solving/quantitative
- Leadership
- Initiative/record of
achievement
- Interpersonal/team
building
- Assertiveness
- Confidence
- Maturity
What We Didn't Know
There are many companies who recruit on campus for Corporate Finance
positions. Search M-Track to help you develop a target list. Attend the
company presentations and learn more about the scope of the financial
function - there may be some excellent opportunities to gain experience
in a variety of functional areas with some of the smaller companies. Do
not exclude an off-campus search as the need for qualified individuals
crosses numerous industries and geographies.
> There are several key steps to developing your career search
strategy:
Research: read as many publications as possible that discuss financial
issues including the Wall Street Journal, Business Week, Fortune and
other financial publications. When reading, learn about the industry and
the players in it. Utilize M-Track and Kresge Library resources,
including Wet Feet Press and the Finance Career Packet, available on
reserve.
Network: start the search early. Conducting informational interviews will
give you vast amounts of knowledge in your area of interest and help in
the overall career search process. The field is very competitive with the
best business students from other schools beating down everyone's door.
Utilize alumni contacts and M-track listings.
Prepare: make full use of the resources provided by OCD. OCD sponsors a
number of workshops that will help you market yourself to target firms.
Workshops include resume and cover letter preparation, and interview
skills. Office hours are available for counseling on all aspects of the
career search and skill development process. Career counselors and staff
members with experience in corporate finance may be available to provide
specific functional perspective.
> Preparing for the corporate finance interview:
The corporate finance interview requires a careful self-assessment in
terms of skills and experience. Recruiters will want to know your life
story and why you made the choices you did. They are interested in
knowing: 1) Is there a fit? 2) Have you excelled in past endeavors? 3) Do
we want to work with you? Importantly, companies will want to understand
why you want a career in finance and why a particular industry is of
interest. Also, they will want to know if you clearly understand the
particulars of the job for which you are interviewing. Make sure you
research this and have a thorough understanding of the position.
A background in finance or a related field will help you get the job, but
it isn't imperative. Even if you do not have any finance experience you
can demonstrate transferable skills. Demonstrate a strong technical
ability through your MBA, sell all other relevant skills you possess and
show your motivational ability to excel at a job that really excites you.
Officer
Contact Information
Andrew Kleeman
atkleem@umich.edu
Kagan Seymenoglu
kagans@umich.edu
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