Corporate finance is a dynamic and essential field that plays a crucial role in the financial health of any organization. From managing a company’s capital structure to handling risk management, corporate finance professionals make decisions that directly influence a company’s profitability, sustainability, and growth. A corporate finance vacancy offers numerous opportunities for career development and financial expertise. However, these positions demand a unique skill set, combining both technical financial knowledge and soft skills that foster strategic decision-making and effective collaboration.
In this article, we will explore the key skills needed to secure and excel in a corporate finance role. Understanding these competencies is crucial for those looking to advance their careers in the finance sector, as they provide a solid foundation for success and growth within this competitive industry.
Key Takeaways
- Technical Skills Matter: Proficiency in financial analysis, modeling, and reporting is essential for corporate finance roles.
- Risk Management is Crucial: Being able to identify and mitigate risks is key to maintaining financial stability.
- Communication is Key: Effective communication with stakeholders is essential for explaining complex financial data.
- Leadership and Teamwork: Collaboration and the ability to manage teams and projects are vital for higher-level roles.
- Career Growth Potential: A career in corporate finance can lead to senior leadership positions like CFO due to the skills gained in financial strategy and decision-making.
Financial Analysis and Reporting
At the core of corporate finance is financial analysis. Professionals in this field must be capable of analyzing financial statements, assessing performance indicators, and making sense of large volumes of financial data. They need to prepare detailed reports that offer insights into a company’s financial performance, and help senior management make informed decisions.
Key tasks include:
- Analyzing balance sheets, income statements, and cash flow statements
- Conducting financial modeling and forecasting
- Assessing key financial ratios, including return on equity (ROE), return on assets (ROA), and profit margins
- Identifying trends, anomalies, or areas requiring attention
A solid understanding of financial reporting is essential, as corporate finance professionals need to communicate these complex financial results clearly and concisely to stakeholders, such as investors, senior executives, and regulatory bodies.
Financial Modeling and Valuation
Financial modeling is another critical skill for corporate finance professionals. It involves creating detailed representations of a company’s financial performance using spreadsheets and other financial tools. A financial model serves as a forecast or a tool to evaluate future scenarios.
Key aspects of financial modeling include:
- Constructing accurate financial models to predict a company’s future performance
- Using discounted cash flow (DCF) analysis, comparable company analysis, and precedent transactions to value a company or its assets
- Evaluating merger and acquisition (M&A) opportunities, investments, and capital projects
- Applying sensitivity and scenario analysis to assess the impact of various business decisions
A corporate finance professional must be proficient with advanced Excel functions and analytical tools to build complex financial models that support decision-making. Valuation skills are especially critical for positions dealing with mergers, acquisitions, or capital raising.
Strategic Financial Planning
Strategic financial planning is a key competency for corporate finance professionals, particularly those in higher-level or senior roles. Professionals need to guide companies toward long-term financial goals while considering market conditions, company objectives, and available resources.
Tasks associated with strategic financial planning include:
- Setting long-term financial goals and creating plans to achieve them
- Budgeting and forecasting for future periods
- Aligning financial strategy with business goals
- Evaluating potential investments and capital expenditures to support business growth
- Managing liquidity and working capital to ensure financial stability
Corporate finance professionals in strategic planning roles must have the foresight to assess both short-term and long-term implications of decisions, considering financial risks and opportunities.
Risk Management
Risk management is essential in corporate finance because every financial decision carries some degree of risk. Identifying, analyzing, and mitigating these risks is critical to protecting a company’s financial health.
Key components of risk management in corporate finance include:
- Identifying various types of financial risks (e.g., market risk, credit risk, operational risk)
- Assessing the potential impact of these risks on the company’s financial performance
- Developing strategies to minimize exposure to financial risks, such as using hedging instruments or diversifying investments
- Monitoring and reporting on risk metrics to senior management
A corporate finance professional must have strong risk management skills to prevent losses and safeguard the company’s assets. Effective risk management not only protects the company but also positions it to take calculated financial risks that could lead to growth.
Understanding of Capital Markets
A deep understanding of capital markets is vital for corporate finance professionals, particularly when they are involved in raising capital or managing a company’s debt and equity structure. Capital markets professionals should have knowledge of both debt and equity financing options and be able to evaluate which options best suit the company’s financial strategy.
This includes:
- Understanding the workings of equity markets (e.g., issuing stocks, managing share buybacks)
- Understanding debt markets (e.g., issuing bonds, managing debt structures)
- Analyzing market trends and economic factors affecting the capital markets
- Managing relationships with investors, analysts, and stakeholders
An understanding of capital markets allows corporate finance professionals to guide their companies on the best ways to raise funds and manage financial risks.
Attention to Detail
A corporate finance vacancy requires someone with an exceptional attention to detail. Mistakes in financial calculations or errors in financial reporting can have significant consequences for a business. Therefore, professionals in corporate finance must have a keen eye for detail and be able to identify and correct errors in their work quickly.
Key tasks involving attention to detail include:
- Ensuring accuracy in financial reports and statements
- Reviewing calculations and analyses for consistency and accuracy
- Detecting errors in financial models or forecasting assumptions
- Ensuring compliance with financial regulations and standards
Attention to detail is essential for maintaining the integrity and reliability of the company’s financial information.
Communication Skills
Effective communication is one of the most important soft skills for corporate finance professionals. While technical financial knowledge is critical, being able to communicate complex financial data and strategic insights to non-financial stakeholders is equally important.
Key communication tasks in corporate finance include:
- Presenting financial analysis and reports to senior management, investors, and other stakeholders
- Explaining financial decisions and strategies in a clear and understandable manner
- Negotiating with external parties such as banks, investors, and vendors
- Working with cross-functional teams to align financial strategy with overall business goals
Strong communication skills allow corporate finance professionals to build relationships, influence decisions, and convey key financial insights to a broad audience.
Leadership and Teamwork
While technical skills are necessary, corporate finance professionals often find themselves working in teams and leading projects that require collaboration across departments. Leadership and teamwork skills are essential for success in these roles. This is particularly important for higher-level roles that involve managing teams and working with executives on strategic initiatives.
Key leadership and teamwork skills include:
- Managing and motivating a finance team
- Collaborating with other departments, such as marketing, operations, and legal, to align financial and business strategies
- Coordinating cross-functional efforts to achieve financial goals
- Leading projects involving complex financial analysis or capital investment decisions
Being an effective leader and team player enables corporate finance professionals to drive projects to completion and foster a collaborative work environment.
Problem-Solving and Critical Thinking
The ability to solve complex financial problems and make sound decisions under pressure is an essential skill for corporate finance professionals. They need to evaluate different options, consider various factors, and choose the best course of action.
Key aspects of problem-solving in corporate finance include:
- Analyzing financial challenges and proposing creative solutions
- Using data and financial models to support decision-making
- Anticipating financial risks and proposing mitigation strategies
- Managing financial crises and challenges effectively
Critical thinking helps corporate finance professionals make informed decisions that are aligned with the company’s goals and long-term strategy.
What Are Finance Skills?
Finance skills are often associated with industry-specific positions, such as accountants and finance managers. This definition only scratches the surface when examining finance’s role in business. Finance skills are soft and hard skills that enable stakeholders to manage and navigate financial decision-making and problem-solving.
Some common roles that require financial skills on a resume are:
- Accountants
- Financial analysts
- Chief financial officers (CFOs)
- Underwriters
- Finance managers
Each role requires varying skills and experience levels. Yet, several skills are important, and often mandatory, across all positions. Here’s an overview of what finance skills employers want and what you can do to enhance your resume.
Finance Skills You Need on Your Resume
Accounting Skills
The first, and perhaps most important, finance skill employers ask for is accounting. This doesn’t mean you need to have previous experience as an accountant, but rather proficiency in reading and understanding financial documents, including:
- Balance sheets
- Income statements
- Cash flow statements
- Annual reports
The data points extracted from these financial documents inform finance and business leaders about a company’s financial health and its future initiatives.
For example, cash flow management—tracking a company’s assets as they move in and out of the business—is an incredibly important metric. Leadership and key stakeholders use it to predict how much money will be available at any given time and how much is needed to cover outstanding debts.
Since accounting is fundamental in tracking a company’s performance, employers tend to offer a competitive salary to those who possess these skills. According to Emsi Burning Glass data, prospective finance professionals with accounting skills can expect a median salary of $80,320 or more.
Analytical Thinking Skills
While employers need team members who build financial statements, business leaders need experience analyzing and leveraging this information. This is called financial statement analysis, the process of reviewing key financial documents to better understand a company’s performance.
This is done by analyzing performance metrics found on various financial statements and through financial ratios. Some important ratios include:
- Current ratio, which measures a company’s ability to pay off its short-term commitments
- Quick ratio, which calculates whether a company can pay off its short-term obligations with liquid assets
- Debt-to-equity ratio, which evaluates a company’s financial efficacy by dividing a company’s total liabilities by shareholder equity
Analytical thinking has quickly become a high commodity in the finance job market. Some of the top employers advertise finance job postings that require analytical thinking. According to Emsi Burning Glass data, the top 10 companies that require this skill include:
- PNC Bank
- Travelers Insurance
- Citigroup
- Charles Schwab
- JPMorgan Chase & Co.
- Humana
- Anthem Blue Cross Blue Shield
- Wells Fargo
- The Hartford
- Health Care Service Corporation
Financial Decision-Making Skills
Decision-making is an essential skill for aspiring leaders. While business leaders often take time to understand an organization’s goals, initiatives, and mission, finance is crucial to positioning a company for success.
Managers in any department can benefit from finance knowledge. For example, estimating a project’s financial impact is a common responsibility, often done by calculating its return on investment (ROI).
Data-driven financial decision-making creates a clear framework for company leadership to reference and provides the building blocks to a far more elusive finance skill: intuition. For this reason, it’s invaluable to include on your resume.
Management Skills
Like most industries, employers in the finance sector always look for applicants with management skills and experience. These skills are needed for managing people as well as the various moving parts of a company’s capital structure and reporting processes.
This skill doesn’t apply solely to mid- and high-level managers. For example, preparing an organization’s budget requires management skills. Whether a quarterly budget for performance tracking or a budget proposal to recommend future initiatives, the preparation of this essential document calls for collaboration, regular communication, and clear direction.
Financial Reporting Skills
Many finance professionals deal with historical data, but looking to the future is equally as crucial.
Financial forecasting predicts a company’s financial future by examining historical performance data, such as revenue, cash flow, expenses, or sales. This is an incredibly important skill to include on a resume since it often assists business leaders in major decisions around areas like hiring, budgeting, and strategic planning.
Cash flow forecasting is a particularly important form of forecasting. These predictions help support a company’s stability by determining whether it will have enough cash to cover future expenses. As a result, these skills are often synonymous with “forward-thinking”—a valuable characteristic of prospective finance employees.
Communication Skills
Most prospective finance professionals understand the importance of accounting and analysis skills, but many minimize the role of effective communication.
This skill can take the form of strong oral communication in meetings or written communication in financial documents. Being an effective communicator also requires explaining financial jargon in simple terms. This is accomplished through financial literacy—the understanding and use of financial terminology, statements, and concepts.
Since many stakeholders and clients are outside the financial sector, companies often select candidates who can communicate complex industry language to others. Emsi Burning Glass shows a steady increase in finance job postings requiring communication skills over the past year.
Investing Skills
In today’s market, most employers know profits made from their goods and services aren’t enough to sustain long-term growth. Investing as one form of capital allocation is a great way for companies to generate even more money outside of their operations.
Since investing is a riskier endeavor than releasing a new product to market, it’s important for employers to hire individuals with a keen eye for investing. For example, a company that has numerous alternative investments should hire people who understand these assets and can assess the varying risks.
Another aspect of this industry that’s grown in popularity and demand is sustainable investing. This trend of purpose-driven investing has created a need for financial leaders who value and understand environmental, social, and corporate governance (ESG) factors when deciding whether resources should be contributed to a venture.
How to Improve Your Finance Skills
Finance skills are essential for industry leaders and managers. These positions require an intuitive knowledge of financial principles and statements to unlock critical insights into a company’s performance and potential.
One of the best ways to develop these high-demand skills is by taking an online course. These courses can offer a solid foundation in finance and accounting concepts while giving you the tools and processes to tackle some of the biggest financial challenges companies face.
Are you looking to strengthen your finance resume? Check out our finance and accounting courses, including Leading with Finance, Financial Accounting, Sustainable Investing, and Alternative Investments, to acquire the skills needed to land an interview. If you aren’t sure which course is the right fit, download our free course flowchart to determine which best aligns with your goals.
What are the basic functions of corporate finance?
Dylan Moldrich has a long international career as a finance professional. He’s identified the five corporate finance basics. Knowledge of these areas is step one in how to get a job in corporate finance.
Financing and capital raising
One of the key questions that corporate finance professionals have to answer is, ‘what is the cheapest form of finance?’. The answer can make or break business goals.
“The business can fund new investments in many ways,” Moldrich says.
“They can use their retained earnings—the saving of profits already made by the business. But if there isn’t any money available within the business, then they have to raise money from external sources.”
When it comes to raising capital externally, there are two distinct sources of money. There’s debt capital, which is like a bank loan with interest, or equity capital, such as Afterpay’s shareholders—who expect a return on investment.
“The business needs to decide their preference, do they wish to raise debt capital or equity capital, or a combination of the two. The main issue here is to raise the money in the cheapest possible way,” explains Moldrich.
In the case of Afterpay, to fund their international expansion, the cheapest possible way appears to have been the market—with the issue of $1 billion in shares. What makes this possible is that Afterpay hasleverage in equity capital after shares rose 660 per cent in value in just three months.
“You need an understanding of the cost of debt, the cost of equity, the weighted average cost of capital and the impact of leverage. All of these things help the corporate finance professional make good capital raising decisions,” Moldrich says.
Capital budgeting
Often, the only time you hear about capital budgeting is when there’s a budget blowout. It usually involves a government department and a dollar sign with a lot of zeros behind it. As you can imagine, it’s a sign of capital budgeting going horribly wrong.
What makes capital budgeting trickier than annual budgets is that it’s for business opportunities that might have a long time horizon—between one and twenty years.
“It involves evaluating what we need to invest to get the project up and running, then the cash flow that the project will generate each year, over its useful life. Then we evaluate the project to see if it is viable or not,” explains Moldrich.
“We use various capital budgeting techniques such as the internal rate of return, the net present value, the payback period, the return on investment and more complex issues like valuing options. That’s what capital budgeting is about.”
These techniques alone can provide enough financial data to green light a project—or shut it down, before it’s even considered.
Also Read : What Are The Best Strategies For Budgeting In Company Finances?
Conclusion
Corporate finance is a diverse and rewarding field that offers numerous career opportunities for those with the right skill set. To succeed in a corporate finance role, professionals must possess a blend of technical expertise, such as financial analysis, financial modeling, and risk management, along with soft skills like communication, leadership, and critical thinking. As businesses continue to grow and evolve, the demand for skilled corporate finance professionals will remain high, making it a lucrative and sustainable career path.
FAQs
What qualifications do I need for a corporate finance role?
A bachelor’s degree in finance, accounting, economics, or a related field is typically required. Many professionals also pursue certifications such as the CFA (Chartered Financial Analyst) or CPA (Certified Public Accountant) to further enhance their credentials.
How can I develop my financial modeling skills?
Financial modeling skills can be developed through training programs, online courses, and hands-on practice with financial spreadsheets. Many professionals also learn through experience and mentorship.
What tools do corporate finance professionals use?
Corporate finance professionals commonly use Microsoft Excel, financial modeling software, and enterprise resource planning (ERP) systems such as SAP or Oracle. Familiarity with Bloomberg terminals and other financial tools is also beneficial.
Is risk management important in corporate finance?
Yes, risk management is essential. Corporate finance professionals must assess and manage various financial risks to safeguard the company’s assets and ensure long-term financial stability.
How important are communication skills in corporate finance?
Communication skills are vital. Corporate finance professionals must explain complex financial information to non-financial stakeholders and collaborate with teams across the organization.
What is the role of strategic planning in corporate finance?
Strategic planning in corporate finance involves aligning financial goals with business objectives, creating long-term plans, and assessing investment opportunities to drive business growth.
Can a corporate finance role lead to executive positions?
Yes, many corporate finance professionals transition into executive roles such as CFO (Chief Financial Officer) or other senior management positions due to their expertise in financial strategy and leadership.
