When it comes to managing a company’s finances, the Chief Financial Officer (CFO) will be responsible for everything in this area. Their duties in an organization will include financial planning and managing the cash flow of the business. They will work to assess the strengths and weaknesses of an organization as far as their finances and report directly to the CEO with their findings.
What Does a Chief Financial Officer Do?
The role of the CFO is a very demanding one, and their job can be broken down into a few different categories. Firstly, they’ll often spend the majority of their time working on reporting and analyzing the company’s financial reports for the shareholders. Of course, in larger companies, they’ll have a large team to support them with this task, but they will have to oversee this process to ensure all reports are completed in time as required. The CEO must ensure that the company is able to manage its cash flow and meet all of its commitments. Some companies assign a group of individuals to this task, called the treasury group, who manage the cash balance and the working capital for the business.
When it comes to accounts and debt, these will also be overseen by the CFO. The Return on Investment is something that the CFO will be highly focused on, which may also help to impact the Chief Financial Officer’s salary when they perform well. They should be aiming to create the highest return on assets and return on equity with the help of the financial planning and analysis team they employ. The information this team comes up with can then help to inform decisions within the company.
The Importance of the CFO
The CFO is critical for the success of a company. They will work to optimize the organization’s financial performance, which can make or break its success in the upcoming years. They’ll want to work to please the company’s shareholders, and their work can also help to raise the overall value for a company when performed successfully. The CFO is a supporting position to the CEO and is often seen to be one of the top executives alongside the CEO and COO. For CEOs that aren’t as financially focused, the CFO can take away this burden from them and provide them with the reports and details they need when they are required.
Many companies today employ a CFO to ensure their business is compliant and meeting the quality control standards that are expected within their industry. They can also be very influential on the company’s strategies and work as a partner to the CEO in this area. The CFO is a very secure position within most companies today, as almost all companies are looking for ways to increase their profits year after year.
The Responsibilities of the CFO
When it comes to the daily responsibilities of the CFO, these are a few of the most important tasks they’ll undertake as part of their role:
- Provide leadership for the company’s financial and accounting teams
- Offer recommendations to the CEO and other executives regarding the finances and decisions of the company
- Create budgets and financial forecasts and ensure all financial reporting within the company is completed as required
- Form good relationships with the senior management team and stakeholders to receive the full support that’s needed
- Review financial and HR procedures within the organization
- Offer advice on financial planning and long-term goals for the organization.
What Qualifications are Needed to Become a CFO?
As you can tell, the CFO position is a very senior position within an organization today. For that reason, you’ll likely need a minimum of ten years of experience within the financial industry, including many years of management experience. CFOs usually hold a degree in finance, economics, or accounting but will likely hold an MBA or CPA on top of this. Many companies hire CFOs externally, especially if they are a large company where this position is critical for their success. However, you may also work up to this position from within your company’s financial department if you demonstrate excellent managerial skills.
What Soft Skills are Needed to Become a CFO?
While the CFO position is usually hired based on their financial experience, there are some soft skills that are critical for success in this position. Firstly, a good CFO will be able to communicate well with both executives and employees lower down in the company. They should demonstrate excellent leadership skills and work to lead by example. As well as strong verbal communication, they’ll also need to offer excellent written communication and reporting skills, as these are used more in this position than other executive positions. They’ll also need to have the ability to form relationships with the Board of Directors, CEO, and COO, as they’ll work closely with these individuals on a daily basis.
The CFO’s Relationship with Other Executives
The CFO will work closely with the Chief Executive Officer (CEO) and Chief Operations Officer (COO). This team is sometimes called the C-Suite, and they are the ones who guide all of the decision-making for a company. Within this team, the CFO leads the decisions in regards to finances, but they will report directly to the CEO in most organizations. They are often seen as an advisor to the CEO and COO, who can guide them to make the best decisions regarding the business’s daily operations. The CFO will then likely have another team sitting below them, with a few key managerial positions in the financial department reporting directly to them.
The CFO is a critical position within any large organization today and can guide their team towards financial success. Without this position, organizations will lack the guidance they need to stay afloat and continue to grow and generate higher profits each year. While it may take many years of your career to reach the CFO position, it offers many great rewards and challenges. CFOs will support the CEO with all financial matters and can offer them the help they need to make good decisions for the organization moving forward based on their current financial situation.
