More U.S. companies are doing business abroad. Some 65% of businesses with fewer than 1,000 employees maintain suppliers or vendors outside the United States, according to Global Trade Magazine. As companies continue to extend their reach worldwide, they are seeking job candidates who have developed skills and expertise in international financial management.
What Is International Financial Management?
Also known as international macroeconomics, international finance is the study of monetary interactions between two or more countries, with a focus on areas such as foreign direct investment and currency exchange rates, according to Investopedia.
Globalization has underscored the importance of international financial management. Domestic businesses strategically expand internationally to reduce the operating costs of producing their products and to limit their exposure to a single economy.
Developing strategic partnerships overseas also allows corporations to be competitive and offer diverse services to customers. As part of this initiative, financial managers work globally to evaluate prospective mergers and acquisitions and are tasked with navigating international markets and their unique requirements.
Factors Affecting International Financial Management
Managing the finances of a multinational corporation can be challenging and complex. Aside from monitoring financial statements, such as profit-and-loss statements and balance sheets, domestic financial managers must keep a close watch on an organization’s production costs, operating expenses, sales and profits. They ensure balance sheets accurately reflect current cash, liquidity, fixed assets, debts and capital.
Several factors make financial management challenging on an international scale.
- Foreign Market Fluctuations. While domestic companies focus on U.S. dollars, businesses that operate abroad need to take into account fluctuating conversion rates in local currency for cash inflows and outflows.
- Different Tax Regulations. Multinational corporations must address legal and tax differences. While domestic tax managers learn one set of tax regulations, international financial management professionals must learn several. They must then determine if profits and taxes will remain in the foreign country or be transferred to the home country.
- Financial Reporting Differences. While domestic companies follow generally accepted accounting principles, other countries may not. To this end, financial reports from other countries may be prepared differently and have alternative interpretations.
- Varying Borrowing Costs. Expanding operations in other countries can be challenging. Financial managers decide whether their employers borrow money domestically or where they operate internationally. Considerations include differences in interest rates, repayment terms and collateral types.
- Raising Capital. Typically, domestic businesses look to existing shareholders to raise additional equity capital, or they file legal documents to approach potential investors. In a foreign country, regulations differ. As a result, shareholder rights could be more stringent, and capital costs could be higher.
- Political Risks from Foreign Governments. A U.S. business owner is rarely concerned that the government will seize company assets — unless there’s a tax bill due. In some foreign countries, however, there is a risk that the government will confiscate assets and take over a company if it believes the company is making too much money.
Careers in International Financial Management
The globalization of U.S. businesses is the driving force behind the growing field of international financial management. These professionals offer their organizations a broad set of corporate finance skills and are better equipped to take on new responsibilities to meet global challenges.
A financial analyst advises businesses and individuals in making investment decisions by assessing the performance of stocks, bonds and other investment vehicles using data and analytics. Financial analysts focus on trends that affect a certain industry, geographical region or product type. They must understand how new regulations, policies, economic trends and political situations affect investments in the country or region where they work.
Financial Analyst Job Outlook and Salary
The U.S. Bureau of Labor Statistics (BLS) projects the job market for financial analysts to grow by 6% between 2018 and 2028, slightly faster than the national average (5%). A growing range of financial products and the need for in-depth knowledge of geographic regions are contributing to this growth. Financial analysts earned a median annual income of $85,660 in 2018; the top 10% of these professionals earned more than $167,420, according to the BLS.
A financial manager is responsible for an organization’s financial health. They analyze data and advise senior managers on ways to maximize profits, reduce costs and expand the business. As such, they create financial reports and forecasts, direct investment activities, and develop plans for the long-term financial goals, all while ensuring that legal requirements are met. Financial managers also supervise employees who prepare financial reports and budgets.
Financial Manager Job Outlook and Salary
The BLS expects the job market for financial managers to grow by 16% between 2018 and 2028, much faster than the national average. Financial managers earned a median annual income of $129,890 in 2019; the top 10% of financial managers earned more than $208,000, per the BLS. Experienced financial managers may advance to become chief financial officers.
Tax managers are responsible for preparing and filing taxes for a company in a complete and accurate manner to mitigate the risk of an audit. As part of this role, they are expected to find and document all possible deductions to ensure their employers are not overpaying taxes. Other responsibilities include participating in and properly documenting initial public offerings (IPOs) and mergers and acquisitions.
Tax Manager Job Outlook and Salary
The BLS projects the job market for tax managers (closely related to accountants and auditors) to grow by 6% between 2018 and 2028. Globalization and a complex tax and regulatory environment will likely continue to lead to strong demand. According to PayScale, the median annual income for a tax manager is around $98,000 as of June 2020.
Financial Reporting Manager
Financial reporting managers create financial reports, direct investment activities and develop plans for long-term financial goals. They also prepare financial statements, business activity reports and forecasts.
Financial Reporting Manager Job Outlook and Salary
The BLS projects the job market for financial reporting managers to grow by 16% between 2018 and 2028, much faster than average. Per PayScale, the median annual salary for a financial reporting manager is around $96,000 as of June 2020.
Investment bankers serve as sales agents to connect buyers and sellers in financial markets. Focusing on securities, commodities and financial services, they sell securities to individuals, advise companies in search of investors and conduct trades.
Investment Banker Job Outlook and Salary
The BLS projects the job market for investment bankers to grow by a steady 4% between 2018 and 2028. Services that investment bankers provide, such as helping with IPOs and mergers and acquisitions, will continue to be in demand as the economy grows.
Investment bankers earned a median annual income of $62,270 in 2019; the top 10% of investment bankers earned more than $204,130, per the BLS.
The role of the management consultant, or management analyst, is to recommend ways to improve a company’s efficiency with new systems, procedures or organizational changes and to work to ensure changes are effective. Management consultants advise managers on how to make organizations more profitable by reducing costs and increasing revenues. Organizations typically hire them on a contract basis to develop strategies for entering a new market and remaining competitive.
Management Consultant Job Outlook and Salary
The BLS projects the employment of management consultants to grow by 14% between 2018 and 2028, much faster than average. The demand for management consultants will likely increase as organizations seek ways to improve efficiency and control costs. Areas of growth include health care and information technology in cybersecurity, as well as smaller, more specialized management consulting firms.
Management consultants earned a median annual income of $85,260 in 2019; the top 10% of financial reporting managers earned more than $154,310, per the BLS.
Economists collect, analyze and evaluate economic data and follow trends. Economists working for corporations help managers and decision-makers understand how the economy will impact their businesses. Besides corporations, economists may find employment at think tanks, international organizations or research firms, where they study and analyze economic issues, often for articles to be published in newspapers and journals.
Economist Job Outlook and Salary
The BLS projects the number of economist jobs to increase by 8% between 2018 and 2028, faster than the average for all occupations. An advanced degree is sometimes required for advancement to higher-level positions.
Economists earned a median annual income of $105,020 in 2019, according to the BLS; the top 10% of these professionals earned more than $185,020.
Pursuing a New Career Path
As more corporations do business abroad, companies are seeking highly skilled accountants with expertise in finance to help them navigate increasingly complex environments, unique requirements and political elements. Earning an online Master of Accountancy degree with a concentration in finance from Rider University helps prepare you to pursue a variety of career paths. Learn more about the program today.