What is CFO?
CFO stands for chief financial officer, a senior manager who oversees all financial-related activities of the firm.
The CFO has several responsibilities which include the monitoring of the company’s cash flow and financial planning. The CFO also takes into consideration the weaknesses and strengths of the firm’s financial standing and suggest and implement programs to improve the financial health of the organization.
The CFO can be compared to a controller or a treasurer since the CFO’s main responsibility pertains to the management of the finance and accounting departments.
Role of the CFO
The CFO is mainly concerned with the financial aspect of the firm’s operations. But managing the finances of a company is not that simple since it requires the CFO to handle several departments and functions.
1. Controllership rolesâ€” The CFO may also assume the role of a controller and as such he or she is the one responsible for the presentation and report of accurate financial data. The CFO must ensure that the financial data is accurate and timely since the firm’s stakeholders such as employees, creditors and shareholders rely on these data heavily. A company’s decision is made based on the financial data available.
2. Treasury rolesâ€”The CFO also has the task of managing the financial condition of the company. The CFO is the one who decides on how to invest the company’s money while weighing the risks. The CFO is also responsible for the firm’s capital structure and decides on the mix of equity, internal financing and debt.
3. Financial strategy and forecasting- The CFO has the responsibility of making the decision for the future growth of the firm. The CFO has the task of identifying the area of operations that is most profitable for the firm and make suggestions on how the firm can leverage on this information.