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geniusboy [140]
3 years ago
14

What does the CFO of a company do

Computers and Technology
1 answer:
Sophie [7]3 years ago
6 0

For many privately held businesses, the decision to hire a chief financial officer (CFO) is often a difficult decision.  Beyond the issue of whether the company can afford a high-caliber financial professional, many business owners are often confused over just what it is that a CFO does or should do. 

More than just a glorified bookkeeper (or someone whose long service to the company has been rewarded with a fancy title), an effective CFO plays a number of important roles within the entrepreneurial company that are essential in providing a strong financial foundation for a growing business.  Listed below are some of the critical areas in which an effective CFO will work to provide financial support for a company’s business objectives.

Implements/Supervises Internal Controls:  A CFO is responsible for bringing important financial controls to a company.  Those controls should include the effective management of cash flow and overhead expenses, establishing credit policies for customers and working with major vendors to achieve more favorable payment terms, and implementing procedures for measuring and evaluating optimal inventory levels.  At a higher level, a CFO should also develop effective controls that provide oversight against fraudulent activities.

Handles Projects With Major Financial Impact:  Beyond implementing and monitoring company controls and systems, an effective CFO will also handle those projects that require significant quantitative and qualitative analysis in order to arrive at an understanding of the options that are available.  For example, a CFO will take responsibility for developing a company’s annual budget, interacting with the business owner and department managers to ensure that the final product accurately and objectively reflects the real requirements of the business.  A CFO might also conduct a thorough analysis of a company’s future capital investment requirements as a first step in securing additional financing.

Cultivates Relationships With Outside Financing Sources:  A major responsibility of an effective CFO is to establish good working relationships with banks as well as other financial institutions that may have an impact on the company’s ability to finance its operations.  Activities in this area can include regular meetings with officers at the company’s bank to review ongoing operations, negotiating more favorable terms for bank lines of credit, and discussions with private investors on how additional capital might be invested in the firm. 

Drives Major Strategic Issues:  An effective CFO can also be expected to play an important role in addressing major strategic issues that can have an impact on the company’s long-term future.  Such issues might include the development of an company acquisition strategy to help fuel additional growth, or the divestiture of particular product lines or business activities that no longer match the company’s business objectives.  A CFO would also play a key role in any effort to seek investment from the public financial markets or to launch an initial public offering (IPO).  

Serves As Key Advisor To Company Management:  Finally, an effective CFO is a key member of the management team of a growing entrepreneurial company.  Because of his/her financial acumen and general business knowledge, a good CFO will help the business owner and other top executives make the tangible connection between a company’s operations and its financial performance.


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