A Chief Financial Officer (CFO) in a company is responsible for the financial control and analysis of a company. We can say that they are in charge of optimizing and managing all of the company’s available resources with the goal of increasing the company’s growth, making it more profitable, and sustainable over time.
The main objective is to INCREASE PROFIT with the least possible risk.
THE ROLE OF THE CFO IN A COMPANY
The CFO plays a crucial role in the financial STRATEGY and ECONOMIC HEALTH of the company.
It is common for many companies not to have a CFO and for the general manager to assume the CFO’s role since their functions might be perceived as similar.
However, while the general manager should have a strategic vision, manage the company, set goals, and align all departments with a focus on producing and selling products or services, the CFO should manage and procure the financial resources necessary for the company to continue its regular operations and keep growing. It’s vital that companies are divided by departments and that each person focuses their time and effort on tasks where they have the most knowledge and skills.
MAIN FUNCTIONS OF A CFO
Some of the functions that the CFO of a company any takes care of include:
- Financial Strategy: Develops financial strategies that align the company’s resources and operations with its long-term goals.
- Economic-financial analysis: Analysing historical and current data to view the company’s situation and evolution over time.
- Financial Planning and Forecasting: Development of financial plans and forecasting models to anticipate and prepare for future economic scenarios.
- Financing Needs: Plans and anticipates the financing needs that the company may have and deals with banks to achieve the best financing in terms of term and cost.
- Budgeting: The CFO works meticulously to DEVELOP BUDGETS, which involve planning future revenues and expenses, as well as adjusting and reviewing them over time to ensure the company stays on the right path towards its financial objectives.
- Investment Analysis: The CFO is responsible for analysing possible future investments, considering the strategic plan, and analysing the feasibility, profitability, and ways to finance those investments.
- Strategic Support: The CFO helps the general manager make strategic decisions based on indicators that show the health of the business and conveys all the information to the general manager to evaluate the various alternatives available.
- Risk Management: Identifying and mitigating financial risks.
PROFIL OF A CFO OR FINANCIAL DIRECTOR:
An effective CFO combines technical skills and financial knowledge with sharp business acumen and strategic leadership.
ESSENTIAL SKILLS
Generally, a CFO has a strong background in finance, a university degree in finance, specialization through a master’s degree in financial management, mastery of accounting, and often complemented with advanced degrees and certifications such as CPA, CMA, or MBA.
Also, they must fully master tools like spreadsheets (Excel) as it is an indispensable tool for data analysis.
CONCLUSIONS
The CFO is a key piece in the company, since every company is created to make money and the CFO is the person in charge of having that financial control and is also a connection point between all departments depending on all the company’s spending and investment decisions.
Lack of planning and financial control can only lead to increased business risks; there are many companies that lack the figure of the CFO, which leads to enormous frustrations, instability, lack of liquidity to face payments, and a lack of control over the money that comes in and goes out.
In short, any company, both small and medium and large, needs planning and control of their resources. If we cannot have the resources of an internal CFO, we have the possibility of hiring an external financial consultant for a period of time to guide us towards growth.
