What is a CFO? If you were to ask an executive holding the title of Chief Financial Officer, or CFO, this question, you would almost definitely spend hours listening to an long answer. While CFO’s do play a number of roles in an organization, when you are looking for a brief explanation, the core duties and responsibilities of a CFO can be summed up in a few paragraphs.
The Three Core Duties of a CFO
Your roles and responsibilities as a CFO can vary from corporation to corporation depending on the industry and its size. If you have dreamed of holding a high-ranking title, there are three core duties you should know about before you take the leap and start pursuing your degree. Knowing about these three core duties can help you make a realistic decision to work towards being a finance executive. After all, the competition in the field is fierce and you must be wiling to learn about what you are competing for before you do the hard labor.
The first duty of a CFO is to be a controller. Executives with controllership duties must take the financial reports from the past to present accurate financial information to stakeholders and investors for future decisions. Many different entities rely on the historical financial information of a corporation, and having accurate data to present is imperative. This is why CFO’s must review the reports and also analyze the data before it is ever presented.
In addition to presenting past financial information, a CFO will handle the company’s present finances. In a single day, you may choose how to invest a company’s money, oversee the capital structure and address serious issues surrounding capital. Since risk and liquidity are so important, this duty can be really stressful.
The final core duty of a CFO is forecasting. Forecasting is all about identifying the areas where a company can improve its financial situation in the future and making the right decisions to make the forecast come true. Predicting financial scenarios can be very complicated and risky, and this is why CFO’s must use models in economic forecasting to make well thought out decisions. The best CFO’s are able to predict issues that can arise and the models that will make the company the most money in the long run.
Related Resource: Typical Day of a CFO
The Growing Importance of the CFO
While a CFO has always played a big role in corporate life, CFO’s now have bigger roles than they ever have in the past. CFO’s are now becoming company leaders and strategic business partners who are involved in top-level decision making, according to an article in Forbes magazine. With economic downturns hitting corporations so hard, it is no surprise that CFO’s have grown in notoriety when they place effective crisis management plans in place. If you want to be a large player who does more than just crunch numbers, this could be the executive position to pursue.
Without a talented finance leader, there is no way a corporation can succeed long term. CFO’s now have broader roles in corporate environments, and professionals holding this title enjoy the power that they are being given. Now that you have a broad answer to the question “What is a CFO?”, it is time to decide if a CFO is what you want to be.