What is Corporate Finance? The Beginners Guide

You pay great attention to detail.

You have a critical and analytical mind.

You possess strong interpersonal skills.

You have a deep interest in financial analysis and financial reporting

You are considering taking the CFA course or doing an MBA in finance.

Is this you?

If yes, then you make a great candidate for a corporate finance job. This career path leads to exciting growth opportunities, great pay packages and a mentally stimulating professional life.

But hold on, what is corporate finance? And why don’t we know more about it? Finance students hear a lot about investment bankers, wealth managers, and financial analysts, but they don’t know much about the importance of corporate finance. If you are curious and unsure about this line of work, allow us to enlighten you.

What is Corporate Finance?

Think of corporate finance like the heartbeat of any company. It’s all about the money moves—how businesses manage their cash, plan their budgets, and fund their operations. But it’s more than just crunching numbers.

Really, it’s about balancing risks and spotting opportunities, all to make sure every dollar (or rupee, or yen) is working hard for the company’s future.

Whether it’s getting off the ground with some startup cash or pulling off big moves like mergers, corporate finance is key. It’s not just about keeping the company afloat, it’s about pushing it to thrive.

Basically, corporate finance is the secret sauce behind a company’s growth & success

What is the importance of corporate finance?

As we mentioned earlier, every company has corporate finance. The organisation can’t operate without it. But why is it so essential? Corporate finance deals with the day-to-day financial activities such as business cash flow, accounting, taxation and financial statements. Whether it is a rupee, dollar or yen… every buck is accounted for. Organisations work with large sums of money for several activities such as expansion, inventory, internal activities, employee salaries, infrastructure and investments. Corporate finance is necessary to ensure the funds are utilised well. Any profitable company will have a strong corporate finance team at the helm, making smart and informed financial decisions. This is the importance of corporate finance in a nutshell.

What does a corporate finance professional do?

Here are some of the responsibilities of the corporate finance team:

• Records and maintains all financial transactions in an organisation.
• Follows guidelines, rules and standards set by the company, industry and the government.
• Tracks the company’s various financial transactions and evaluates the overall fiscal health of the organisation.
• Identifies potential investment opportunities for the company, including merger and acquisition deals
• Ensures there is enough cash flow to pay for salaries, vendors, inventory and other requirements.
• Creates budgets for various projects.
• Helps to find sources for raising capital.

Job profiles in corporate finance

1. Treasurer

Treasurers develop budgets, financial statements, strategies and reports. They also ensure the company follows all the necessary regulations and standards.

Average annual salary: Rs 4.5 lakhs

2. Corporate finance manager

The professional manages the cash flow within the organisation, analyses financial data and identifies potential risks as well as cost-cutting measures.

Average annual salary: Rs 5.5 lakhs

3. Corporate financial analyst

This position is for those finance experts who can work on budgeting, data analysis and forecasting. They also research investments, commodities and other potential assets for the company.

Average annual salary: Rs 6 lakhs

Educational:

4. Financial controller

Financial controllers carry out processes that help to optimise operations within the company. They also offer strategies and advice to other departments to help them make better business decisions.

Average annual salary: Rs 10 lakhs

5. Cost analyst

Businesses need professionals to keep track of their transactions and expenses. A cost analyst is the right person for this job as he helps to minimise losses and create efficient budgets and cost estimations for various projects.

Average annual salary: Rs 7 lakhs

How to become a corporate finance professional

You need the tools to handle the complexities and challenges of working in corporate finance. Recruiters also have specific requirements when screening potential candidates. So what are they? And how can you go about achieving the correct credentials? Let’s find out.

Qualifications for corporate finance

Corporate finance professionals have to deal with a variety of responsibilities such as funding, investments, taxation, accounting and day-to-day financial operations. Companies require professionals with the expertise, foresight and competency to manage all tasks. There are several courses that understand the importance of corporate finance, such as:

• MBA finance — gives a strong foundation in finance concepts and management skills.
• CFA — the syllabus has a detailed set of finance topics such as economics, quantitative methods, portfolio management, financial analysis and derivatives.
• Investment banking operations — this well-rounded finance program offers relevant subjects like corporate finance, financial modelling and mergers & acquisitions.
• Financial modeling — this course teaches students how to use spreadsheet software like MS Excel for collecting, organising and analysing financial data.
• ACCA — the perfect course for management accountants who want to work in corporate finance.

Skills needed in corporate finance

While it depends on what your job profile is, professionals are required to possess most of the skills mentioned below:

• Analytical skills
• Problem-solving skills
• Attention to detail
• Financial planning and analysis
• Risk management
• Ethical thinking
• Forecasting
• Company valuations
• Budgeting techniques
• Financial modelling
• Accounting standards
• Strong interpersonal skills

A day in the life of a corporate finance professional

• Start the work by going over the company’s accounts.
• Then move on to working on the financial report due at the end of the month.
• Attend a meeting with the sales department to discuss projections.
• Return to your desk to work on a financial model for a new company project.
• Do the paperwork for a bank loan for the company.
• Meet your team for a weekly review.
• Time to clock out, but first check your planner for commitments for the next day.

How Proschool can help shape your career in corporate finance

Are you interested in working in corporate finance? Then you need Proschool’s exceptional coaching facilities to help you achieve your goal. One of India’s top professional institutes, Proschool offers several finance courses that will set you on your chosen career path. The CFA course in particular is preferred by several recruiters. Proschool’s expert faculty offers customised study plans, doubt-clearing sessions and individual attention for all students. The ACCA course is also taught by industry professionals and gives students a holistic learning experience. You can also choose to study Financial Modelling and Investment Banking Operations here. All of these courses use innovative learning methods and incorporate real-world training. They help you understand key finance concepts, industry insights and the importance of corporate banking.

Benefits of studying with Proschool

• Proschool has fully-equipped coaching centres in major cities across India.
• Students who are unable to attend physically can enrol for Proschool’s well-planned online classes instead.
• The professors help students get a proper sense of how the industry works. They also offer personal attention and support to students who need it.
• Proschool has a library of additional resources that help students ace the exams, such as mock tests, practice papers, prep books and many others.
• Proschool’s private and exclusive placement portal is accessible to certified students.
• The staff also provides recruitment-centric training such as interview etiquette and writing resumes.

FAQs

What is the importance of corporate finance?

Corporate finance is a section of finance that helps companies maintain financial stability and manage various activities such as budgeting and raising capital.

What are the risk factors in corporate finance?

Corporate finance professionals have to be careful when managing the finances of a company. There is potential for credit, liquidity and operational risks to watch out for.

Any event that can result in a loss of funds is a threat, so professionals are trained to look for and mitigate any disasters.

How to prepare for a career in corporate finance?

Like most finance jobs, your qualifications matter a great deal in corporate finance. A CFA certification is ideal as it offers training in various job profiles. You also need to develop your skills. Corporate finance experts have strong analytical and problem-solving abilities.

Is it tough to get into corporate finance?

Finance is a competitive field and corporate finance can have several applicants vying for the same job. You should have the proper credentials, such as a CFA charter, the perfect balance of skills and be able to present yourself professionally and confidently. Candidates who fully understand the importance of corporate finance have a better chance of getting good jobs in this industry.

Conclusion

While it may be an underrated division of finance, the importance of corporate finance is undeniable. Many finance leaders, CFOs and business heads have started in this department. Professionals gain invaluable financial proficiency when working in corporate finance, and this helps them move up the corporate ladder quickly. If you are convinced that this is the field for you, then reach out to Proschool to get started on your finance journey.