A successful business doesn’t focus solely on “dollars and cents.” True but then money is important too. After all everyone has only so much to spend and then you’ll need more. Also true that every businessperson is not a financial expert – and even if he is, you can only wear so many hats. Enter CFO – Chief Financial Officer.
What is CFO?
Well the definition is simple – a person who manages money. But think of a huge multinational conglomerate or even a local corporate or small business. There’s really a whole lot that needs to be done as far as fiancés are concerned. But first, who is a CFO? The CFO is the highest ranking official of the accounts department – also called finance department or accounting department – in any organization. He is the first link between the C-Suite – the decision makers – and the employees. He sits with the C-Suite and provides input with respect to priority of expenses, taxation, budgeting and so on. It is his responsibility to allocate budgets to the various members of the C-Suite so that they can perform their tasks with the help of their teams. The CFO is responsible for the overall financial health of the organization. As such, he has the responsibility of ensuring that everyone within the organization limits expenses to the minimum possible.
Hierarchy in Accounting
With the CFO at the top here is a chart showing the typical hierarchy within the Accounting department of an organization. Of course it’s not cast in stone and there may be many variations but in general these are the designations you will have to traverse to become CFO if you wish to escalate via the accounting route.
Roles and Responsibilities of a CFO
As mentioned earlier, the CFO is responsible for the financial health of the business. This means he must ensure that there is enough cash flow for the day to day operations of the company and a bit left over for emergencies, capital expenses, and other expenses. Without delving too deep into the details of types of capital or types of accounting, suffice it to say that the fiscal health of any business is not simple to manage. The CFO must for instance ensure that the employees are paid a fair wage as is the C-Suite whilst simultaneously ensuring that salaries do not hog up the budget leaving little or nothing for other things like purchasing raw material or for marketing expenses. In short he must perform an act of jugglery keeping everyone happy. Here’s a breakup of the different tasks or responsibilities entrusted to a CFO.
CFO as a Controller
CFO is the financial head of an organization. As such, he contributes significantly towards strategic decision making. He prepares and presents financial statements to both internal and external stakeholders such as the C-Suite, investors, shareholders, income tax department, and so on to help them make strategic decisions regarding the short and long-term goals of the business.
CFO as a Treasurer
In the role of a treasurer, it is the CFO’s responsibility to ensure that the business has sufficient cash flow at all times yet there is no wasteful expenditure. He minds the money of the organization.
CFO as Economic Strategist
As an economic strategist, the CFO studies the financial market as well as other markets and advises the C-Suite about where and when to invest. For instance he may advise the management to invest in real-estate when land prices are low with a view to saving money in future when land may be required for expansion.
CFO as a Reporter
As a reporter, the CFO reports the financial position of the company to both internal and external stakeholders. He assembles analyses, prepares and publishes the annual financial report and presents it to stakeholders. He also files the tax returns of the company and fulfils other regulatory obligations.
How to become a CFO
As far as qualifications go, obviously you need to have some kind of education in accounting. You may – after B.Com – complete your masters in finance, costing, or another branch of accountancy. However, no matter how highly qualified you may be, you cannot directly become the CFO of an organization – at least not in a corporate. SMBs and SMEs, may be willing to take you on to save on expenses but in that case you’ll have to wear many hats with a veritably non-existent team to help you. If however you aspire to head the finance section of a corporate, MNC or conglomerate, you’ll have to start lower down – at the level of assistant or manager and work your way upwards. As you go, you’ll learn a lot about the organization, its functions, and so on all of which will help you when you attain your goal. For more on this read our blog on Climbing the Corporate Ladder.
The role of a CFO is a diverse and dynamic one and the responsibility is great. As CFO the growth and development of the organization is in your hands because no organization can grow without finance. From BYN we wish you all the best in your endeavors. Meanwhile we’re right here bringing you news about recruitment, career, and education. You’ll find us on social media too – just type blogyourniches into your search box. We’re on Quora and LinkedIn too. And of course you can always share your thoughts here in the comments. Have you subscribed to our weekly newsletter? Why not do so right now?