The Role of the Finance Function
Why Every Business Has a Finance Function
Imagine a fast-growing UK business like Gymshark, the Solihull-based fitness brand. Every day the business decides whether to launch a new product, hire a new designer, sign a social-media athlete, open a new store or pay a supplier. Every single one of those decisions comes down to money. Who is tracking the money? Who tells the managers what they can afford? That is the job of the finance function.
The finance function is not just about filing invoices. It is the information hub of the business: every other department relies on it to plan, to spend sensibly and to prove whether what they’re doing actually works.
The Purpose of the Finance Function
OCR describes the purpose of the finance function in two ways: it provides financial information and it supports business planning. In practice, that breaks down into several day-to-day jobs.
Recording transactions — every sale, purchase, payment and receipt is logged. Modern software like Xero or QuickBooks captures this automatically but a human still has to check the numbers are right.
Paying bills — suppliers are paid, staff wages are processed, HMRC gets its tax on time. Pay late and suppliers stop delivering; pay HMRC late and the business faces penalties.
Producing financial statements — the income statement, cash flow forecast and statement of financial position are built from the raw transaction data. These reports show owners and investors how the business is performing.
Budgeting — finance sets a spending plan for each department. Marketing might be given a £50,000 quarterly budget; operations a £120,000 equipment budget. The function then tracks whether each team stays within it.
Managing cash flow — finance makes sure the business has enough cash in the bank to pay what it owes, when it is owed. A profitable business can still go under if cash runs out mid-month.
Supporting decisions — before any big call (a new product launch, an overseas store, a new factory), the finance team runs the numbers and tells the decision-makers what the likely return and risk look like.
The finance function has two named purposes in the OCR spec: providing financial information and supporting business planning. Everything the team does — bookkeeping, bill-paying, budgets, cash flow, decision support — feeds one of those two purposes.
How Finance Connects to Every Other Function
The finance function only works because every other part of the business talks to it. Take Innocent Drinks, the London-based smoothie company owned by Coca-Cola. Each department brings a different kind of money question.
- Marketing wants a budget for its next advertising campaign. Finance tells them what is affordable and tracks whether the campaign returns more revenue than it costs.
- Operations needs to cost raw fruit, bottling, transport and labour. Finance adds these figures up to calculate the cost per unit and flag when a product line stops being profitable.
- Human resources runs payroll — wages, National Insurance and pensions — through the finance function. HR also asks finance whether the business can afford new hires.
- Senior managers look at the financial information the team produces to decide whether to expand, invest or cut back.
Worked Example — Choosing Between Two Campaigns
Suppose Gymshark’s marketing team is deciding between two campaign ideas for autumn. Campaign A costs £80,000 and is forecast to bring in £200,000 of extra sales. Campaign B costs £150,000 and is forecast to bring in £300,000. Which should they pick?
The finance team is asked to run the numbers. Campaign A brings in £120,000 more sales than it costs, for £80,000 spent — a return of 150% on the spend. Campaign B brings in £150,000 more than it costs, for £150,000 spent — a return of 100%. Campaign A is the better use of money per pound invested, even though Campaign B brings in more revenue overall. Without the finance function running this analysis, marketing might simply pick the bigger-looking option. With it, the decision is evidence-based.
Setting objectives — finance tells the board what is realistic. A target of 30% growth sounds ambitious; finance says whether the business has the cash to fund it and the margins to survive the stretch.
Spotting warning signs — finance watches the monthly numbers. A slow slide in gross margin or a widening gap between sales and cash received can flag a problem months before it becomes a crisis.
Talking to outside partners — banks, investors, suppliers and HMRC all want to see accurate financial statements. If the finance function gets it wrong, the business loses credibility — loans get refused, investors walk away, suppliers demand cash up front.
Every other function depends on finance: marketing uses budgets, operations uses cost data, HR uses payroll, senior managers use financial statements to decide strategy. This is why OCR treats finance as one of four interdependent business functions.
A Small Business vs a Large Business
In a tiny start-up, the owner is often the finance function — using a spreadsheet or an app like Xero to log sales, pay suppliers and send invoices. As the business grows, a dedicated bookkeeper is brought in. By the time a business reaches the size of Gymshark or Innocent, finance is a full department with accountants, financial analysts, a credit control team and a Chief Financial Officer (CFO) sitting on the senior leadership team. The purpose stays the same at every size — only the scale changes.