What does a chief financial officer do? 9 genuine facts about CFO’s duties…

Usually the second most important person in the company after the Chief Executive Officer is the Chief Financial Officer. Do you know what does a chief financial officer do? Why his role is so important for the company and what is his scope of duties. To find out more about chief financial officer and his position read the article below.

What does a chief financial officer do? – table of content:

1. Who is a Chief Financial Officer?
2. Duties of Chief Financial Officer
3. Chief Financial Officer – tasks
4. Responsibility of Chief Financial Officer
5. Education of the Chief Financial Officer
6. Is it worth to become a Chief Financial Officer?

Who is a Chief Financial Officer?

Chief Financial Officer is the financial position of higher rank. The person employed as Chief Financial Officer is responsible for financial actions of the company. His function is extremely important for the whole organization.

Duties of Chief Financial Officer

It is probably not easy to imagine what does a Chief Financial Officer do. It is his duty to watch over the financial matters in the organization. This means that he has to keep an eye on all financial operation in the company. He has to analyze weaknesses and strengths of financial decision making processes, in case of problems has to come up with necessary corrective measures.

Chief Financial Officer is responsible for management in financial and accounting departments and for provision of accuracy and timeliness of financial reports. Chief Financial Officer is the most senior financial specialist in the organization hence he is fully responsible for financial condition of the company.

Diagnostic Analytics – the second most known type of analytics, which deals with reasons or factors, which affect different happenings in the business.

Chief Financial Officer – tasks

To find out more about what does a Chief Financial Officer do let’s take a look at his main tasks:

• management of finance and accounting departments
• ensuring that revenues and expense are balanced in the balance sheet
• supervision of all financial analyses in the company
• issuing recommendation for mergers and takeovers
• acquiring financing
• cooperation with department managers with financial data and budgets analyses
• approval of correctness of financial reports
• consultations with company board and the director of the company on managing strategies
• issuing recommendation related to all other actions in the company

Moreover, the Chief Financial Officer draws up the budget of the company, keeps contact with the banking partners, advises other directors on financial strategies in the company. In addition Chief Financial Officer is responsible for leading new investment initiatives, he makes all decisions about continuation or discontinuation of certain investment expenditures.

Responsibility of Chief Financial Officer

Chief Financial Officer is responsible for all financial processes in the company. He controls cash inflows, financial planning and tax issues. His financial reports have to be consistent with all company standards since their accuracy may influence the existence of the project, department of even the whole organization.

Chief Financial Officer has an impact on investment, capital structure and income and expenditure management. Chief Financial Officer is usually the right hand of the CEO in forecasting and analyzing of costs and acquisition of funds for all planned initiatives.

Chief Financial Officer has an impact on investment, capital structure and income and expenditure management. Chief Financial Officer is usually the right hand of the CEO in forecasting and analyzing of costs and acquisition of funds for all planned initiatives.

Many key decision in the company is based on reports and insights created by the Chief Financial Officer. It is worth to remember that, the CFO has to follow all the rules and regulations specific for the country of operation. For example in the USA, the CFO has to know about Generally Accepted Accounting Principles (GAAP) issued by the Financial Standards Board (FASB) and adopted by the Securities and Exchange Commission (SEC). Other regulations such as Sarbanes Oxley Act, which deal with fraud and corporate failures, have to be followed by all companies as well.

Education of the Chief Financial Officer

We already know what a Chief Financial Officer do, but what is his education. The responsibility of CFO is huge and he plays the major role in the company. For this reason only the individuals, who are well educated and accustomed with their niche are able to work on such position. It is expected that a CFO should have academic training and professional experience in finance, economy or financial analysis.

Frequently, such individuals posses the certificate of Chartered Financial Analyst (CFA). The experience in accounting, investment banking, economy and statistics comes in handy as well.

Is it worth to become a Chief Financial Officer?

It turns out that the job market capacity is quite large and companies more frequently appoint Chief Financial Officers. The global economic growth increases the necessity of hiring on such positions. The Bureau of Labor Statistics (BLS) predicts that hiring on high rank financial management roles will increase by 15% between 2019 and 2029. The average annual salary of financial officer was 134 180 US dollars in 2020.

The role of Chief Financial Officer is critical and encompasses broad scope of tasks, starting from those basic like budget management, through controlling over financial departments of the company, to consulting of all company operations. Despite the fact that Chief Financial Officer is usually subordinated to the Chief Executive Officer, he is often the main decision maker in crucial company issues, as the person, who is the best-oriented in the financial situation of the company.

Read also: What is a CEO?

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