You might have heard household names like Steve Jobs, Mark Zuckerberg, and Elon Musk a thousand times. All these guys acted as the Chief Executive Officer (CEO) of different high-end companies. Although these men played a significant role in their companies’ success, they had some help. Every great CEO is known to have a somewhat greater and remarkably more attractive accountant by the side. On their business cards, these handsome industry titans emblazon the letters “CFO”.
What is a CFO?
Ultimately, the Chief Financial Officer is in charge of every business thing and aspect of dealing with finances. Businesses are operated wholly around their finances, which means that the CFO has duties that cover all aspects of operations. In other words, you can think of CEOs as their company’s quarterbacks. They cannot only control the ball every down but can also call the play that is scheduled to run next.
On the other hand, CFOs act as the head coaches. Generally, they are responsible for determining which plays get into the playbook and are also in charge of player recruitment and salaries. Furthermore, the CFO sees to it that s/he understands and analyzes the company’s current financial position critically enough to put down detailed reports, as well as future projections. To put everything in perspective, CFOs’ one eye should look on the past while the other focuses on the future.
In many companies, the CFO manages the analysis and creation of all financial reports for the organization, making sure that they often check the regular flow of cash through the company. Carefully watching on past financial trends combined with predicting future flows and ebbs enables the CFO to offer the CEO, as well as other executives, with the relevant knowledge for making optimal business decisions that have the highest possible chance for success. At all times, CFOs must essentially live in the past, present, and future to carry out their different responsibilities effectively.
Typically, CFOs have “controllership duties”. Generally, these involve responsibilities in reporting and analyzing the company’s financial operations. The creation of these reports happens regularly and, basically, attempts to gather all the necessary data into a digestible format that is presentable to company executives, shareholders, and any other stakeholders, such as creditors or prospective investors. For all business decisions, the detail and accuracy of these reports are essential since they play a significant role in the decision-making process.
Additionally, the CFO plays the role of making sure the organization has adequate funds on hand for usual operations, and should also be ready for any unforeseen financial events. You can find these responsibilities under the purview of what is known as “treasury duties”. By performing this function, the CFO oversees the company’s capital structure. It often involves checking if operations flow seamlessly, balancing the organization’s debt, equity, and financing, and ensuring that everyone has the resources required to perform their job. Also, treasury duties entail the management of inventory, accounts receivable, and accounts payable.
We looked at how the CFO is in charge of the creation and analysis of reports. With these reports, the CFO can forecast (or predict) potential changes and future trends on the horizon for the industry. If you’re a CFO, then you already know that preparing for the future is a fundamental aspect. What’s more, the CFO is responsible for the performance of the wide range of products and services of the company. The CFO then deeply analyzes the performance to decide what’s and what isn’t working and to see if and where additions, cuts, or changes are required. In all of the company’s investments, CFOs assume an active role to guarantee optimal return on investment (ROI) always.
Undoubtedly, CFOs on demand have a considerable impact on the success of a business.