Updated: May 20
Whether it’s a 50-person firm or one with a workforce of 5,000, companies rely on chief financial officers for critical duties and information. The day-to-day tasks of these financial professionals may vary, but CFOs generally have four major functions.
Here’s a closer look at those responsibilities and how top-tier CFOs set themselves apart.
The primary role of a CFO, of course, is to make sure financial records of the company are in order. “They’ve got to make sure the books are right,” says Brian Hamilton, chairman of Sageworks. “Most CFOs have that covered.”
CFOs should make sure that management has critical decision-making data. “Companies need key data to make good management decisions,” Hamilton says.
In order to provide that forward-looking data, CFOs must develop good forecasts and utilize reliable benchmarking data. Hamilton explains: “They need to know, ‘How are we doing compared to the competition? How are we doing this year compared to last year?’”
Every company has compliance issues to address, and the CFO oversees many of them. Filing and paying taxes is one example.
Publicly held companies have many additional compliance issues that privately held companies do not, and the CFO is often responsible for handling these. CFOs oversee duties related to shareholders, such as issuing dividends, and with the Sarbanes-Oxley Act, CFOs have myriad responsibilities related to preventing fraud and disclosing financial information.
The final CFO function that is vital to companies is assisting internal customers – the people in the company, such as operating managers, who need data to determine things like decisions on pricing or the lifetime value of a customer.
Unfortunately, many CFOs limit their focus to the accounting aspect of their job – presenting financials -- and they can become glorified controllers instead of helpful partners guiding the company’s strategy. “All they’re doing is presenting balance sheets and income statements and cash-flow statements,” Hamilton says. “That’s ironic because if you look at the definition of accounting, it’s supposed to be the basis for financial decisions. Accounting is not an end; accounting is a means to an end.”
CFOs seeking to propel their companies will help the company make strategic decisions by taking an active role in financial analysis and management. Some CFOs aren’t used to this role, but using automated solutions to analyze the company’s finances and benchmark results can make it easier to provide actionable insights and communicate those to CEOs and company owners.
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