As the Chief Financial Officer (CFO) of your company, you are responsible to the company’s Board of Directors for all accounting and financial matters. You must establish company-wide objectives, policies, procedures, processes, programs, and practices to assure the company of a continuously sound financial accounting structure. Let see the role of Chief Financial Officer and top ten responsibility that every CFO should know:
1. Cash Flow
Chief Financial Officer’s job is to control the cash flow position throughout the company, understand the sources and uses of cash, and maintain the integrity of funds, securities, and other valuable documents. CFO receive, have custody of and disburse the company’s monies and securities. The CFO responsibilities include the authority to establish accounting policies and procedures for credit and collections, purchasing, payment of bills, and other financial obligations. Cash is “king” and the flow of cash, or cash flow, is the most important job a new CFO has in any company.
2. Governance debt
After cash flow, part of the CFO responsibilities is to understand all of the company’s liabilities. A company has many legal contracts, statutory & tax obligations, hidden liabilities in the form of contingencies, leases, or insurance summaries, and expectations from loan covenants and/or the board of directors. As a CFO, if do not watch out for the liabilities, who is?
3. Business efficiency
The new CFO must understand the company business model for generating customer value and translate the operational metrics into measures for performance. The new CFO is the company scorekeeper using tools like the balanced scorecard, dashboards, and financial statement ratio analysis to communicate both the company’s expected and actual financial performance.
4. Department Supervision
In a small organization, the CFO is the supervisor of Accounting, Finance, HR, and IT. In a larger company, the CFO responsibilities may only include the Accounting and Finance functions. Either way, the new CFO supports the company’s accounting and financial functions using job descriptions, policies, and procedures, and methods for automating document control.
5. Financial Relationships
The CFO establish and maintain lines of communication with investment bankers, financial analysts, and shareholders in conjunction with the President. CFO administer banking arrangements and loan agreements and maintain adequate sources of capital for the company’s current borrowings from commercial banks and other lending institutions. In addition, CFO invests the company’s funds and administer incentive stock option plans.
6. Finance or Raising Capital
We would think that finance is one of the key CFO responsibilities. Yes, it is important, but it comes after other more pressing operational issues, like those listed above. The CFO will establish and execute programs for the provision of capital required by the company, including negotiating the procurement of debt and equity capital and maintaining the required financial arrangements. The CFO coordinate the long-range plans of the company, assess the financial requirements implicit in these plans, and develop alternative ways in which financial requirements can be satisfied.
7. Financial Obligations
As the new CFO, you need to approve all agreements concerning financial obligations, such as contracts for raw materials, IT assets, and services, and other actions requiring a commitment of financial resources.
8. Record Control
The CFO is responsible for the financial aspects of all company transactions including real estate bids, contracts, and leases. The CFO also provides insurance coverage, as required, ensures the maintenance of appropriate financial records, prepares required financial reports, ensures audits are completed in time and statutory book closing occur. One of the primary CFO responsibilities is ensuring company compliance with financial regulations and standards, like Sarbanes-Oxley, the IRS Tax Code, and GAAP (and soon, IFRS).
9. Shareholder Relations
The CFO analyzes company shareholder relations policies, procedures, and information programs, including the annual and interim reports to shareholders and the Board of Directors, as well as recommends to the President new or revised policies, procedures, or programs when needed.
10. Budgeting and Expense Control
Budgets are a fact of life, and the CFO is responsible for overseeing the budget process, collecting the inputs, and comparing the company’s actual performance with estimates (the budget). It is an ugly process that falls within the CFO area of control.