A Chief Financial Officer (CFO) can be very beneficial for a firm if you know what they are for and how to use them effectively. The CFO is the keeper of your finances but also has a key role in analyzing your way forward. They do this by providing insight based on your history and help chart your way forward based on your finances, markets and financial conditions in your industry. But what are the functions of a CFO? You could have a very long conversation about that, but here is a summary of the major functions of a CFO.
Act as the Company Controller
The company controller is responsible for your profit and loss, cash flow, revenue, account receivable and payable, and other financial reports on how your company has been operating. This is the “rearview mirror” function of the CFO as they are basically reporting on what already happened. While this information is needed for shareholders, stakeholders, investors, and creditors, the real value comes in managing the company. This data can be invaluable, if properly used, when deciding on adjustments to operations or the direction a manager might want to take in any market.
Your CFO is also responsible for the capital position of the company. They must work with management to balance debt, equity, and liquidity with risk to the business from the market and policy decisions. Keeping a healthy cash flow with a sufficient capital reserve and access to credit is integral to the health of the company and central to the job of the CFO.
Regulatory filings must be addressed, including filing and paying taxes for the company. This necessarily involves data from your financial reporting and it must be accurate. Your CFO has the primary responsibility for handling reporting both public, such as Sarbanes-Oxley Act compliance, and as required to private investors and shareholders. The CFO also serves an integral function in preventing potential fraud.
Strategy and Forecasting
Due to their intricate understanding of the firm’s financial status, cash flow, revenue streams and expenses, the CFO is perfectly positioned to assist with strategic planning for the firm. They can identify efficiencies in the organization that lower costs, for instance, that can be exploited in the marketplace. In the alternative, they might discover costs that could be cut to become more competitive.
If you need a CFO, or some coaching for your current CFO, help is available through the use of outside CFO services from firms such as CustomOne CFO & Controllers. Their financial professionals can supplement and provide guidance to internal CFOs. If you don’t have a CFO, you can contract for these services with CustomOne CFO & Controllers, They will get the assistance you need to get the most strategic value from your CFO position.