By Aniket Bose. Edited by Arjun Chandrasekar.
A chief financial officer (CFO) is the senior executive at a firm/company responsible for managing the company’s financial actions. Their duties consist of tracking cash flow and financial planning, along with analyzing the company’s financial strengths and weaknesses and then providing solutions to get rid of those weaknesses. The role of a CFO is very similar to a treasurer because of the responsibility for managing the accounting and finance teams while ensuring that the financial reports are accurate and finished at the right time.
The CFO’s Job
The CFO reports to the chief executive officer (CEO), but they also have valuable input in the company’s investments, the structure of capital, and how the company manages its income and expenses. For instance, when the marketing team of a company wants to launch a new campaign, the CFO can assist them in ensuring that the campaign is achievable for the company and give their input on any funds available to finance the campaign. In most companies, the CFO is the third-highest position, where they play an important role in the company’s strategic initiatives. However, in the finance industry, the CFO is typically the highest-ranked position at a firm. The position of a CFO can be very rewarding to the individual, but it also comes along with a lot of legal considerations that need to be followed very closely.
The CFO also works alongside the CEO for forecasting, analysis of cost-benefit, and working to obtain additional funding for various initiatives, like campaigning. If a CFO works at their firm/company for a long amount of time, they can be promoted by the board of directors to become a chief operating officer (COO), CEO, or even the president of the company/firm. The CFO role has grown from only being focused on quality control to expanding their focus to different sectors of a company like business planning and changes in the company’s process of doing things. They are now a strategic partner working with the CEO and play an important role in influencing the company’s strategy to grow. The main cause for companies being able to generate a lot more profit now compared to the past is because of the activity and work put in by their CFO’s.
The CFO must report accurate information based on their financial reports to the CEO since the majority of the company’s decisions are based on those financial reports that the CFO reports. The CFO of any company is held accountable for managing all the financial activities of its company and being able to adapt to generally accepted accounting principles (GAAP) set by the Securities and Exchange Commission (SEC). Usually, the CFO is the connection between residents and elected officials on accounting and other expenses. The CFO helps in establishing a financial policy and is responsible for overseeing government funds.