What is corporate finance? (including 11 jobs to consider)
By Indeed Editorial Team
Updated 10 November 2022
Published 3 January 2022
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
Corporate finance is part of the financial industry. The corporate finance sector provides finance professionals with many options for career specialisation. If you're considering a corporate finance career, learning about corporate finance careers can help you decide if this is an industry for your future career. In this article, we consider what is corporate finance and look at examples of corporate finance jobs you may want to pursue.
What is corporate finance?
Corporate finance is a field in the finance industry that focuses on how companies manage their funding, capital structure and investment decisions. The primary aim of a corporate finance professional is to increase shareholder value by implementing various strategies and balancing profit and risk when capitalising on short and long-term financial planning. The chief financial officer oversees a company's corporate finance tasks and the staff members manage and analyse the company's financial activities to make capital investment decisions. An example of a decision includes financing investment decisions, sourcing capital, and determining the best time for shareholders to receive dividends.
Corporate finance considers the effective use of the capital raised to either establish, purchase or grow businesses. There are two primary corporate finance sub-disciplines, such as capital budgeting and working capital management. Capital budgeting involves deciding which projects to invest in. Working capital management focuses on managing the company's monetary funds, ranging from current assets to liabilities, inventories and short-term borrowing.
Corporate finance tasks
The corporate finance field covers multiple tasks, organised into four major categories:
1. Capital and investment budgeting
Capital and investment budgeting involves decisions about the investment of the company's long-term capital assets. These investments are typically high-risk investments with a high return. Corporate finance employees analyse different investment opportunities through detailed financial analysis to delineate the capital expenditure, income investments, projects included as part of the capital budget and cash flow from the potential projects.
During their decision-making process, corporate finance employees use a financial model to assess the future projects' economic impact. They do a comparison between possible projects for investment. An analyst typically presents the internal rate of return (IRR) and net present value (NPV) to compare different projects and facilitate the best financial decision.
2. Capital financing
Capital financing focuses on making optimal decisions about how a company's finances projects. Financing can take place through equity, debt or a combination of both. There are several ways companies can generate funds to finance investments or capital expenditures, including selling company stock or issuing debt instruments. Companies attempt to balance their use of debt and equity funding. The excessive use of debt can cause a repayment default, while relying on equity may cause a dilution of the primary shareholders' value. The finance manager reduces the weighted average cost of capital (WACC) to improve the company's capital structure continuously.
3. Dividends and the return of capital
Corporate finance managers help decide what to do with a company's excess earnings. A company can give profits to shareholders through share buybacks or dividends, and it can keep the extra profit for future operational requirements or acquisitions. They can use the profits to do share buybacks or pay dividends. Alternatively, the company can choose to keep the extra earnings for future acquisitions or operational requirements. Keeping the excess earnings for future expansion is ideal, as it requires no further debt issuance or selling of equity.
4. Short-term liquidity management
The corporate finance team is also responsible for managing short-term finances. They ensure the company has sufficient liquidity to continue its operations. Short-term financial management focuses on current assets, current liabilities or working capital and operating cash flows. It's critical for a company always to meet its current obligations when due. The company can achieve this by using its current liquid assets to avoid disruptions to its operations. Short-term financial management may involve establishing additional credit lines and issuing commercial papers to create a liquidity backup.
Jobs in corporate finance
Corporate finance offers a variety of career paths and areas of specialisation. The following are examples of corporate finance jobs you can consider:
National average salary: £24,621 per year
Primary duties: A finance officer supports their team members, clients, and stakeholders by performing various financial and administrative tasks. Their role involves preparing budgets, managing records, processing invoices, and creating balance sheets. Finance officers do daily, monthly and annual reconciliation of transactions. They are the primary contact person for financial and accounting issues for different departments. They provide support to the finance manager.
Related: 14 of the best-paid jobs in finance
National average salary: £28,076 per year
Primary duties: Controllers create financial policies, procedures, reporting systems and financial controls to improve the return on a company's financial assets. They monitor compliance with these policies to ensure the protection of the company's assets and adherence to its policies when making financial decisions. Controllers ensure compliance with legislation. Their other duties include ensuring that the company achieves its budget objectives, preparing special reports and interpreting financial data.
3. Cost analyst
National average salary: £32,009 per year
Primary duties: Cost analysts analyse a company's expenses to create reports to manage expenses better. Costs analysts, also called cost specialists or cost accountants, gather financial data for analysis to identify weak areas, including inventory costs and financial data. Their other duties include creating cost estimates and reviewing budgets.
National average salary: £35,822 per year
Primary duties: Management accountants collect and analyse financial data for internal use. They help the company manage its investments while supporting budgeting and funding activities. Management accountants are also responsible for risk assessments, assessing the company's performance and accounting processes. These accountants help the business managers with their financial decision-making, prepare the financial reports, and develop and implement strategies to reduce operational and production costs.
National average salary: £36,671 per year
Primary duties: A financial analyst develops financial forecasts through tracking operational metrics and reports. They analyse financial data and create economic models to make informed decisions. Their duties include analysing past financial results, identifying possible trends, performing variance analyses and making recommendations. Other duties include directing projects' cost analysis and enforcing rules and regulations.
National average salary: £43,399 per year
Primary duties: Corporate finance managers' primary responsibility is the maximisation of the company's profit opportunities. They identify and arrange mergers and acquisition transactions while investing large amounts of money. They give financial advice, ensure the company meets its financial goals and generate investment capital. Their other duties include using economic models to protect financial outcomes, negotiating contracts and liaising with accountants, regulatory bodies, lawyers and other financial experts.
National average salary: £49,466 per year
Primary duties: A credit manager develops credit scores to predict risks when determining creditworthiness. They process loan applications by either approving or rejecting applications and negotiating loan terms. They manage the records of loan applications and handle debt settlements and loan renewals. Not only that, they also ensure that the company complies with regulations. Furthermore, they develop, review and update the company's credit policies.
National average salary: £49,878 per year
Primary duties: Finance associates conduct detailed financial assessments to evaluate, interpret and analyse potential projects. They collect relevant market research, develop complex economic models and write reports. They may assist with reviews, audits and tax preparations. Finance associates advise the senior management team and internal departments on the best practices to ensure the company always complies with financial regulations.
National average salary: £60,831 per year
Primary duties: An investor relations manager oversees the communication between a company's corporate management and its investors. Their duties include responding to queries, attending meetings, providing feedback to management and crisis management. They perform data analysis, plan for investor events, make presentations, and cooperate with equity research analysts.
National average salary: £74,172 per year
Primary duties: Treasurers oversee the company's finances. Their responsibilities include fundraising and sales. They also do the company's financial planning, bookkeeping, budgeting and record keeping. Treasurers manage the company's fixed assets and prepare financial reports. They handle the company's risk management in areas such as interest rates, ventures and liquidity. In addition, they handle the company's cash management procedures.
National average salary: £120,990 per year
Primary duties: Chief financial officers (CFOs) handle the management of a company's economic actions. A CFO assists the finance team and works with multiple departments to allocate a budget for human capital management. They do financial planning, track cash, analyse its financial strength and formulate proposals to reduce its weaknesses. Chief financial officers supervise the company's taxation procedures.
Salary figures reflect data listed on Indeed Salaries at the time of writing. Salaries may vary depending on the hiring organisation and a candidate's experience, academic background and location.
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