A CFO is the Chief Financial Officer of a company and he is responsible for all the financial and accounting matters, administrative operations and risk management. Establishing procedures, policies objectives, programs, processes and practices in a company to ascertain sound financial structure is the key role of a CFO. In small organizations, the role is limited to handling basic accounting and coming up with monthly financial reports, while with larger corporations, he must review accounting, analyze and report regularly to gain the business financial status overall view. This allows the CEO to forecast and compare the revenues of the company.
A CFO’s task is to stay on top of things at all times. In this blog, Maureen O’Connell, Scholastic have jotted 10 words and tasks that every CFO must have on top of their minds at all times.
CFO Key Functions
- Cash Flow: Controlling cash flow by understanding the uses and sources of cash, maintaining securities, funds integrity and documents. The CFO responsibilities include establishing procedures and accounting policies for collections and credit, bills payment, purchasing and financial obligations.
- Company Liabilities: The next key function is to comprehend the liabilities of the company that it may have, tax & statutory obligations, legal contracts, leases, hidden liabilities, insurances and expectations from the board of directors or loan covenants.
- Performance: The next is to understand the performance of the company using balanced scorecard, financial statement analysis to know the actual and expected financial status.
- Supervision: The CFO in small companies is the Accounting, HR, Finance and IT supervisor. In large companies, it is mainly accounting and finance functions, where he can alter the methods, policies, and procedures.
- Financial Relationships: A key function of a CFO is to communicate with financial analysts, investment bankers, and shareholders. Administer banking and loan agreements by maintaining capital sources, knowing current borrowings from lending institutions and banks.
- Raising Capital: A CFO needs to establish programs for capital provision, negotiate to procure debt and maintain financial arrangements. The role is to coordinate the long term plans, assess financial requirements and develop the capital requirements.
- Obligations: Another key role for a CFO is to approve financial obligations including raw materials contracts, IT assets and actions required to fulfill financial resources.
- Record Control:The CFO must have complete record of all the financial aspects, insurance coverage, records and financial reports. A CFO must comply with financial standards, TAX code and regulations.
- Shareholder Relations: A CFO should analyze the policies of the shareholders and analyze the interim and annual reports, besides recommend revising procedures, policies or programs, if required.
- Budgeting:A crucial function of a CFO is to compare the performance of the company with budget by collecting inputs. This is certainly a tough process, but is the key function of a CFO.