Who is a CFO Why Do We Need One?

Who is CFO

WHO IS CFO

A CFO is said to be the connector between the business and the data scientists! She is authorized to manage all the financial actions of a company.

Being a controller or treasurer she ensures the accuracy and completion of a company’s financial reports and that to within the scheduled time. It is her duty to analyze the company’s internal factors that are its strengths and weaknesses and design a strategy for the growth of the company.

For any business to leave its footprints in the corporate world today, managing the financial framework is what it should focus on the most. Shere, the CFOs come into the picture! She has that expertise of making the business reach the desired success while making its roots stronger and stronger with time.

A CFO has a lot of duties to render. Traditionally, the CFOs mainly focused on number crunching and day to day financial functioning of the business. But today, they have a lot more to do.

Their skillset has gradually evolved with time making them one of the strongest pillars of the company. The true test of a CFO is how well he functions in the time of crisis. Therefore, she is not only her name on the designation, but also a leader, influencer, analyst, controller and a strategist!

Being an influencer, their work is to advise and to counsel their team with good communication skills. She should be able to translate tedious information into simple, concise and accessible data.

Being an analyst, the CFO should have a clear understanding of the financial and business model along with strong knowledge of the industry. She sets the benchmarks and conducts profitability analysis for the overall growth of the company.

Being a controller, they must understand and make a balance between the commercial and financial risk. Along with that, a strong internal control is also required to be maintained to meet the regulatory and legal requirements without tampering the activities of the business.

Being a strategistt finally, the CFO has to allocate the financial resources in such a way, the strategies are funded properly without any major financial loss, and this requires the knowledge of not only the monetary aspects, but about the non-financial environment as well.

MAJOR DUTIES OF A CFO

Technological advancement has actually helped the CFOs to be more strategic in their approach. Due to this, they have added more value to business growth. Assembling data for analysis has also become much easier with digital up-gradation. With the help of SaaS, the CFOs are able to share a bunch of information across numerous platforms and boosting productivity up to almost 85%

MANAGING THE TREASURY

The investment decision is taken on behalf of the business where the risk and liquidity factors are taken into consideration. The CFO is said to be the master here. She is not only required to keep a track of all the transactions but is also liable to ensure a business’s financial health. So we can say that, it is totally his duty to look after the difficulties that become a hindrance in generating revenues for the company.

FORECASTING AND ECONOMIC STRATEGIST

The CFO is an asset to the company and plays an integral part in structuring and interpreting the financial data to analyze the efficiency of the business and to forecast the upcoming threats. This way the areas of improvement are identified and strategies to work upon them are also aligned. Both forecasting and economical strategies help flourish the business if the CFO is capable enough to think factually and uses his skill set in a fruitful manner.

DIRECTING THE TEAM

When a person is appointed as a CFO, the expectations reach a totally different tangent. She is therefore required to have a great experience and a conceptual expertise about financial aspects. Her first and foremost duty is to provide a direction to her team members with full accountability.

BUILDING GOOD RELATIONS

Building good relations, not only with all the levels of management but with the external partners and stakeholders is very important in order to work smoothly in a business. They all collectively contribute to the growth of the company.

ESTABLISHING CONTROL ON OPERATIONS

Establishing good control on the day to day business processes and setting benchmarks is another major duty of a CFO. If the strategies implemented are not reviewed and checked upon, there may occur a miscommunication between the departments resulting in losses. Therefore, keeping a check on all activities taking place in all other departments is also done by the CFO.

WHY DO WE NEED A CFO?

Just like we need food to survive, a company needs a CFO. The survival and growth of the business depends majorly on him. If he is not taking this seriously, your company does not have a future in the long run. A CFO alone has the capability to help expand your business, opening a lot more opportunities along with it.

  • She is the fuel to your car and the ice to your milkshake! We often see that the hiring of CFOs is done generally in the multinational companies where this title holds a lot of respect and power. But, on the other hand if we talk about the small scale companies, here this title is often underestimated and employees do not know how powerful this position is and what wonders it can do.
  • In order to take your business to another level and never look back again, hiring a CFO is very important. A company usually does this when it is new and in the growth stage. There the risk taking power of a company is usually high. The more risk you take, the better are the chances of success. You may say that the people already running the business are capable enough to make financial decisions for the company, after all they are the ones who kick started the business in the first place.
  • There is a lot of difference in the approach of a CFO and the other employees or the founder of the company. She is a professional who has a unique skill set designed to make your business a success story. It is not a compulsion that you hire one only from the outside sources. If you come across a genius in your company who has the potential and courage to take tough financial decisions, then this position can definitely be offered to her.
  • If you know the current market situation of your company and know exactly where you want to take it in future, then taking the help of a CFO is the right step towards a guaranteed success. She can act as a lamp and can guide you with the road you should follow in order to reach your desired destination.
  • She is the person who can understand and anticipate all the market situations and complexities in the tax payment areas and can very well handle them with the uncertain environment. Therefore he is also an advisor who can guide you on how to improve your current tax situations and how to build up your current assets.
  • In some cases, the execution of the financial planning may be tough. There the CFO indulges in detailed discussion with her team and ensures that the information is well understood by the stakeholders. The business owners often lack knowledge of the current market scenario related to pricing as it changes every day. This is where the CFO comes into picture. She is the one who critically studies the market and communicates the best of the solutions for the company.

All these activities surely create a burden on the CFOs. But, they can make or break a business by the strategies they implement for the company. Your company might be generating regular profits, but how to use them and where to invest all of it, is the work of a CFO!

About Aditi Singh 84 Articles
Aditi Singh is an independent finance and investment advisor since 7 years and recently added with Investment Pedia. Users are welcome to put comments on her contributions.

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