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What is a CFO in an organization?

A Chief Financial Officer or CFO, also known by the names of financial controller, comptroller, and treasurer is the senior management executive of the company whose primary objectives include making vital financial strategies and recording the cash flow. 

A CFO is the supreme head of the Finance and Accounting department and often works jointly with the CEO of the company to undertake imperative financial decisions for company’s investment or asset composition.

A CFO forms a significant fraction of the top management team of a company and characteristically the liaison between the management directorates on financial matters. It is of utmost importance for the CFO to account fiscal information accurately since most of the business and technological decisions taken by the company is dependent on the information shared by the CFO. All the financial decisions taken by a CFO have to adhere to the basic accounting principles laid out by the regulatory bodies, making the role of a CFO even more fundamental.

Roles and responsibilities of a CFO

A CFO controls the information repository that contains a company’s key financial data. The shareholders, employees, investors, vendors and all other stakeholders of the company rely on CFO to receive correct and timely fiscal information. Apart from managing the large database of monetary information, he is also the brain behind formulating the economic strategy of the company. In simple words, a CFO’s task involves studying market conditions, predicting the financial requisites for the future, and make necessary decisions to capitalize on the profit.

The CFO has the expertise to identify the demands of the company’s business model and convert the operational metrics into guiding lines for planning appropriate measures. At the disposal of the CFO are the different tools such as balance sheet, fiscal statement, and dashboard to evaluate a company’s real financial growth versus the expectations.

In a nutshell, key responsibilities of a CFO include:

  • Managing credit and debit accounts of the company

  • Organizing annual financial reports and budgets for the consequent year

  • Advisory role with regards to making investments

  • Strategic partner of the CEO in planning and reporting financial performance

  • Managing taxation issues of the company

Qualification of a CFO

The majority of CFOs come from finance, business, management, and economics background. The CFOs of global companies mostly have high-ranking financial qualifications such as an MBA in Finance or Chattered Accountancy certification or other qualifications in the likes of finance and management.

What do we expect from a present-day CFO?

The hallmark of a successful finance controller lies in his ability to adapt to the growing industry and foresee future revenue prospects. The participation of CFOs in all important operations in the organization has necessitated them to have sound technical knowledge apart from their expertise in finance alone. 

In many corporate setups, the IT department is seen reporting to the CFOs. Thus, the CFOs should possess a deep perceptive understanding of IT concepts like ERP, and other digital enterprise solutions to be able to offer precise financial solutions.

Chief Financial Officer, or more popularly termed as CFO, is a C-suite executive entrusted with the responsibility of overseeing the financial matters of an organization, including Financial budgeting, Financial Planning, Analysis of market participants to recognize threats and opportunities, and Financial Reporting. With more responsibility to focus on the company’s financials, a CFO today is also expected to conduct the analysis of data alongside contributing their knowledge to business strategy, owing to the fact that data has become central to every department. As a spokesperson for financial matters on behalf of the company, a CFO may also be a Board member, advising the Board of Directors in building a roadmap.

A career in the field of financial management requires one to be armed with the specialized knowledge of Finance and Accounting in addition to that about other functions such as Marketing. Typically, the financial qualification to climb the ladder of CFO ranges from MBA in Finance,, MSc. in Statistics and Mathematics to Chartered Accountants and Certified Public Accountants. Since finance is the life and blood of any business regardless of the industry, the role of a CFO finds relevance in every other function. For instance, the Chief Marketing Office (or CMO) may need the assistance of the CFO in conceptualizing a financial model for a Digital Marketing campaign. As another example, the Chief Technology Officer will need the intervention of CFO when it comes to the cost of integrating a new technology in the current business process.

Evolution in Role

From time immemorial, the role and responsibility of an accountant or financial manager, has been more with keeping records of transactions, bookkeeping and reporting to the executives having the authority of taking important decisions. However, as the digital technology is growing at an unprecedented scale, the role has evolved significantly to the point where a CFO is involved in business planning, participating in strategic decisions of CEO and Board of Directors, managing the capital portfolio and building financial models for future investments.

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