The Chief Financial Officer (or CFO) plays an important role in any corporation. While the specific tasks of a CFO are many and varied, the basics of their role can be outlined very simply. In short, the CFO is responsible for the company’s finances in the past, present, and future.
CFOs Analyze Financial Information from the Past
The first part of a CFO’s role is to look backwards. They are in charge of presenting and analyzing financial information from the company’s past. This reporting must be done accurately and in a timely manner. While this information can have an effect on the company’s business decisions, shareholders and employees also have an interest in the quick and accurate reporting done by a CFO.
CFOs Make Decisions About the Current Financial Situation
Many CFOs were accountants in a past job. This is useful as much of their role falls into advising the company on current financial matters. A CFO will spend time deciding where is best to invest the company’s money. They will make decisions on capital structure as well, determining the best mix of equity, debt, and investing for the company.
A CFO may be heavily involved in the day to day accounting tasks of a smaller company. This can involve managing a budget, monitoring transactions, overseeing accounts payable and receivable, and researching insurance plans and health coverage.
This may seem like a lot of work, but a CFO’s role in the present does not stop at the financial department. These officers are also called upon to train and conference with other departments about financial management. They may also oversee payroll, join in on board meetings, and advise executive teams.
CFOs Build Economic Strategies and Forecast the Future
Much of the CFO’s role is to anticipate financial problems that may arise in the future and prepare solutions in the present. Because their role keeps them familiar with how other departments are running, CFOs are in the positions to offer useful advice. CFOs report on which parts of the company are most financially efficient and which ones need work. This can help pinpoint the places where the company is most likely to make money in the future.
CFOs are also called upon to forecast any problems that may come up for the company and help create solutions to address them. This type of planning helps the company choose which risks to take. Through creating backup plans in case things go awry, a CFO gives a company the security it needs to take certain risks and recover successfully should they fail.
A CFO’s Role is Always Changing
The role of a CFO is always in flux. As the financial world continues to change, CFOs take on new roles and responsibilities in order to keep up. Originally the role was meant to be a gatekeeper for finances. As markets become more volatile, however, the CFO’s in-depth knowledge has been sought after as a strategist and advisor.
The relationship between CFO and CEO has changed along with the economy. Today CFOs share a much closer relationship with CEOs. As markets become more volatile, the CFO’s ability to strategize and plan for the future becomes more sought after. They are often called upon to offer advice in difficult situations. They are also expected to use their knowledge to challenge company opinion should it need to be changed.
The full role of a CFO is difficult to sum up in a few paragraphs. There are many tasks that fall to the person in this position. Chief Financial Officer is a role with a huge amount of responsibility. In return for taking on this load, the CFO is rewarded with a position that has great power to influence and shape his or her company.
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