CFO Responsibilities
What are the responsibilities of a Chief Financial Officer? Are the CFO
responsibilities and duties clear in your organization? Lets take a look
at the CFO role and the top ten CFO responsibilities found in a typical CFO
job description:
1. Cash Flow
As a new Chief Financial Officer, your 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. You receive, have custody of, and disburse the companys
monies and securities. New 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. Company Liabilities
After cash flow, part of the new CFO responsibilities is to understand all of
the companys 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 new CFO, if youre not watching out for the
liabilities, who is?
3. Company Performance
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 thebalanced scorecard, dashboards, and financial
statement ratio analysis to communicate both the companys 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 companys accounting and financial functions using job descriptions,
policies, and procedures, and methods forautomating document control.
5. Financial Relationships
As a new CFO, you establish and maintain lines of communication with
investment bankers, financial analysts, and shareholders in conjunction
with the President. You administer banking arrangements and loan
agreements and maintain adequate sources of capital for the companys
current borrowings from commercial banks and other lending institutions.
In addition, you invest the companys funds and administer incentive
stock option plans.
6. Finance or Raising Capital
You 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 new 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. As the new CFO, youll 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 new 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,
insures 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, likeSarbanes-Oxley, the IRS Tax
Code, and GAAP (and soon, IFRS).
9. Shareholder Relations
A new 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 new CFO is responsible for overseeing
the budget process, collecting the inputs, and comparing the companys
actual performance with estimates (the budget). It is an ugly process that
falls within the CFO area of control.
