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Businesses need to get serious about financial managers

Qualified CAs working as financial managers are crucial to the company’s operations, yet they are undervalued.

Any company, whether it’s the small bakery down the main street or a Fortune 500 company, needs to make money in order to operate. To make money, it needs to spend money in the way of inventory, equipment, supplies, facilities, training, salaries and more.

This makes finance critical to the success of any business. The financial managers of this world are tasked with ensuring the financial health of a company, driving business strategies and plans forward. Excellent financial decisions made by a qualified individual will ultimately increase the value of a business.

Financial management is very closely related to accounting – accountants will collect, and present financial data and then financial managers take this data from financial statements and other information prepared by the accountants and make financial decisions for the company.

Nowadays, particularly in the challenging South African economy, most companies are faced with reduced budgets available for salaries, often combining the functions and responsibilities of two related or similar roles into one. This is generally done to save on costs of hiring two individuals where one can be capable of performing within a dual position.

We are seeing this come to light more with financial managers being required to be qualified CAs or management accountants in order to be able to perform the functions expected of both – gather the data, present it in the form of statements, budgets, cash flows etc. and then take that information, analyse and interpret it, and make strategic financial decisions for the business.

Financial managers’ main responsibility used to centre around monitoring a company’s finances, but now they are increasingly expected to do more data analysis and advise senior managers on ways to maximise profits, improving the bottom line and initiating cost savings in a very competitive and challenging market.

With such augmented responsibilities, how then do companies justify the apparent lower salaries they are offering to potential new financial managers with CA qualifications?

In the South African Salary Survey for 2019, the range of salary for a financial accountant (CA) is between R650 000 and R750 000 per annum, with an average of R700 000 per annum.

The range of salary for a financial manager is between R850 000 and R1 200 000 per annum, with an average of R1 025 000 per annum.

However, in a survey done online, taken with a search run on financial managers in the market in Gauteng and the available jobs advertised, the following data was noted:

The search criteria for financial managers in Gauteng were within the following parameters:

   
Experience required 7-10 years of relevant experience, including about 3-4 years of managerial experience
Qualifications Qualified CA with completed articles with either an Honors or Master’s degree in an accounting science or related science
Area Gauteng
Sample of candidates 340
Job title Finance/financial manager
Current salaries R850 000 to R1.2 million PA
Salary expectations R1.25 million to R1.5 million PA – these allowing for growth, not lateral movements – and in line with job responsibilities
Offered salaries Maximum of R850 000 PA and in coastal areas, R720 000 PA

Financial managers, who are also CAs, have invested their time and spent a great deal of money in obtaining those degrees and accreditations with bodies like Saica, so why should they not be rewarded with the salaries to accompany their experience and their qualifications when they are considered for hiring by a potential employer?

Why are they undervalued when they are instrumental in guiding the business’s long-term strategies and plans aimed at achieving the goals that have been set?

Surely the rules of supply and demand in economics should be in play – there is a high demand for excellent financial managers in a struggling economy where competition is rife; the supply of financial managers in the market with specific qualifications and desired experience, is far less, the higher price for this resource should undoubtedly come into effect.

Where the critical success of a business is leveraged on the decisions made by financial managers, companies should be investing wisely in the right candidate and for the right salary. That’s the only way companies will attract the right people to assist them in attaining business goals and high value, ensuring they maintain competitive positioning and longevity.

When you hire a professional on this basis, you get what you pay for – the right candidate with the right skills and experience, coupled with the qualifications to make critical financial decisions that will see a company grow, maintain its stature within a very pressured economy and allow it to achieve its goals i.e. to stay in business, to make a profit and to provide the dividends it promises to its stakeholders.

“Hiring a professional will cost you a bit more than the average candidate, but can you imagine the cost of hiring an amateur in this sort of role? It extends way beyond a salary, to the facts that poor financial management could lead to business failure in its entirety.”

“Think about these things when you are seeking a new financial manager with “all the bells and whistles” and make sure the salary you are offering is justified and ensures that the person is valued for their critical role in the ultimate success of the business.”

Chantelle Smith is a recruitment specialist at HR Company Solutions.

The views and opinions shared in this article belong to their author, cannot be construed as financial advice, and do not necessarily mirror the views and opinions of Moneyweb.

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“….yet they are undervalued.”

Well there is probably a reason for this. Main one is that they have zero training in “financial management” beyond their academics. The whole focus of their training is checking and preparing complicated low value statutory accounts. And it shows up in practice.

This article would have had some semblance of credibility if it had mentioned other professional certifications such as the fairly well known CIMA that is imho more geared to “financial management. There are other offshore based certifications too though less well known in SA.

The KPMG saga and Steinhoff has deservedly severely dented/crashed the reputations of SAICA and will only recover after many years and a material revision of approach and training by them.
“Why are they undervalued when they are instrumental in guiding the business’s long-term strategies and plans aimed at achieving the goals that have been set?” STEINHOFF = ’nuff said.

This article unfortunately reads like a paid advertorial.

“Steinhoff” (where the malfeasance was ultimately, even if late in the day, picked up by the auditors), VBS, KPMG demonstrate the need for highly skilled and ethical internal and external watchdogs; the “traditional” CA.

The reports emanating from the Auditor-General (another breed of CA) illustrate this. Sadly his reports and red flags appear to be f~rting against thunder. Through no fault of his, the politicians (read: ANC, New Dawn or otherwise) seem to be giving him the Madonsela treatment – some token hand-wringing but no action.

SAICA has indeed lost the plot, focussing on “transformation” instead of defending the “attest” function, if Ramaphosa is serious about attracting and keeping investment and growing the economy, this is an area where he should apply government’s mind.

SAICA is diluting the value of the profession. Their >200m per year Thuthuka bursary students get forced through the system, with hand holding and exclusive extra classes.

Sounds like a motivation to employ CA’s and to pay them lots of money.

Perhaps not a good time to tell us how valuable accountants might be to a business.

Yup especially considering the big audit companies who participated enthusiastically in state capture, have plenty of these individual in their employ. What is rather needed is strong action these individuals, revoke their registration permanently if they had any part, however small, in state capture.

ummmm .. isn’t Markus J also a CA with all of those wonderful qualifications?
How many with those same desirable qualifications are in the financial industry advising on investemnt and running Unit trusts etc. …. what does the last 5 years performance of investment tell us about their skills??

CA,s are not normally Investment managers : Thats a different world run more by economists etc : Referring to Markus Jooste is somewhat Stupid :
Any Person can stray from their their professional standards when their Morals are affected by greed.
The CA qualification is streets ahead of other Financial “Qualifications” , although I concede the Standards are not what they were in the past in the new South Africa.

Rather than financial qualifications, accountants are in dire need of a few ethics classes.

Why they need a recruitment consultant to press their case eludes me. No marketing or negotiation skills of their own perhaps.

Nobody buys qualifications for their own sake (in the private sector anyway). At this level, prove yourself and then negotiate.

Personally, I find CA’s overvalued in much the same way as “fund managers”

CA’s only exist because of laws that have been put in place to mandate that a CA sign off on company financial statements.

In reality they have added no value as has been evident with KPMG themselves who were involved in corruption at several institutions (incidentally, the other large accounting firms do just the same), and the likes of Steinhoff and Enron that flopped despite their books being signed off year after year.

I have worked with several CAs and the one thing that becoming a CA you for (funnily enough) is accounting. They are trained to look at prepared statements to check that they tie up before signing them off.

They are not trained to create those financial statements and manage accounting books.

In my experience, many people who have done accounting at school level and subsequently a recognised diploma have been far more adept at being finance managers since they can actually understand what their subordinates are doing.

It makes one realise that CAs are grossly overpaid simply due to the legal mandate against companies. I would never hire a CA permanently.

i doubt one would want to work for you !
Who exactly do you think prepares the Financial Statements that need to be Audited ??? Load of Drivel .And I,m happy to sign this off as a CA(SA) !

certainly and the industry body SAICA that awards CA(SA) designation creates an artificial shortage by deliberately failing many deserving candidates in order to inflate salaries.

Stop sulking like a baby and study harder next time!

I have met several CAs that have no real feel for numbers and aren’t able to put together a good cash flow for a business.

So sorry I cant really recommend CA as a blanket suggestion for finance manager. Mostly I think the finance world is severely overpaid and not able to add a great deal of value to manufacturing businesses.

Some simple maths literacy and reading if contracts and management of cashflow is essential for businesses instead

Probably too stingy to pay for a proper one then..

Apologies but Steinhof etc has dented the CA’s…CASA..Con Artist Scam Artist

The biggest issue here is that the governing body, SAICA, is more like an old boys club that has increasingly become a glorified government department. Millions are spent on commissions of inquiry to such an extent that they had members cough up a special once-off disciplinary levy. Have you ever heard of anything more ridiculous?? And sum of all action taken was that a handful of questionable members (read: Singh; Jooste etc.) were suspended as members…hip hip hooray, I’m sure that made them feel as if their lives were over.

i have not paid since 2017 due to all the corruption.

I lost my “designation” but not my Brains!

Funny how I am the one following section 20(5), the other keep quite al just look away.

All that the qualification told me was that the person is not completely stupid AND can knuckle down to pass what is a very hectic exam workload. I am a CA btw.

Beyond that the usefulness or crookedness is based on character and especially willingness to pick up more skills. A bright CA that understands his supply chain and basics of the cost drivers of production process plus has more than standard depth of knowledge in law of contract is invaluable. He/She would be more of a commercial manager than financial manager. SAB used to have lots of those, is part of why they were probably the only World Class company this country ever produced.

Great article, I have seen first hand that when you try to employ a cheap resource in this field, poor quality work, questionable work ethic and bad decision making ends up costing exponentially more in the long run.

The problem however is that SAICA doesn’t contribute to bolstering the credibility of the profession. It is overly obsessed with demographics. SAICA’s membership fees are some of the highest in the world, yet it spends more that 80%, (yes EIGHTY PERCENT) of all membership fees collected from CA(SA)’s to plow into a questionable bursary scheme. Don’t believe me, then go study their last couple of years’ financial statements which are available on their website.

Until SAICA restores the balance between professionalism and development a CA(SA) will always be undervalued.

Clearly if you worked for SAICA you are not undervalued..The CEO scored a R8,7m payday last year

My major concern is around cost/financial accounting, if you drill down into your costs e.g. decompose labour cost into publically administered portion (like income taxes, VAT, electricity and municipal rates). Then what portion of your costs are publically administered, 50% to 60% in some cases?

Should cost/financial accountants not have been digging into public finances and been proposing structures such as deferred interest bonds when many projects such as Eskom power plants had a long time line to completion. This would have reduced everyone’s cost structure by matching inflow and outgo. More astute accountants should have noted that this problem was a deeper inter-generational problem (with items such as education crowding out 30% of the government budget, whereas countries like China with a one child policy were saving on such “costs” and subsidising manufacturing and business). We would think they would have hired/sponsored the necessary economists to research solutions around these matters.

The media reports focused on the battle against Corruption rather than the more foreboding intergenerational war and its fallout. Presumably a media supported by the small minds in SAICA or have I got it wrong and no accountants influence or work in government? One certainly comes to mind Anoj Singh….

Half of these okes belong in jail — Oh sorry – That was nasty !!! — I take it all back – Half of these okes do NOT belong in jail !!!

Talking from experience, there’s nothing special about being a Finance Manager.

This gig must just be reserved for BCom graduates.

Exactly, because no one is willing to pay to get a proper one. The logic is right there, you just need to reach out and touch it

What I am saying is that, after spending so much on education and training (i.e. articles) when you become a financial manager you realize that it’s not a mentally challenging job in any way to justify sticking to it and investing life and skills into it. That’s just me. So people who at most have an honors with 3-4 years experience in financial accounting can do well in this job.

Is it worth demanding so much money to provide monthly management accounts, preparing budgets and just sitting around waiting for IFRS updates and updating the financial statements template? I don’t know.

Besides that, not everyone who is a CA is talented enough to take on the job or to be one. You have to search for that talent and perhaps that is why it’s not only CA’s that are sought as financial managers.

Competently there’s ACCA, CIMA and SAIPA members as well.

Typical “successful” CA’s in audit firms/commerce are the ones who pander to management and are “Yes men”. Independence, objectivity, integrity are taught as part of the syllabus but are rarely practiced. Obsequious, servile behaviour is rewarded above independent thinking and authenticity. Hence we have the debacles that we see on the JSE these days. Maybe CA should stand for con-artist!

businesses value politics, friendships and other BS more than skills. Primarily because those running the business are not the ones owning the business but just waiting to retire.

A CA’s professional competence is like any professionals competence – it is dependent on the effort, circumstances, ability and experience of the individual. You cannot say that CA’s, as a group, is more competent or less competent than a different group. Despite what CA’s think of themselves – they are only human. And despite what the rest of the world think of CA’s, they are only human.

I can’t think of any other profession that spends so much time self-promoting.

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