What Does a Chief Financial Officer Do?

A Chief Financial Officer (CFO) is ultimately responsible for the financial operations, health and success of their organization. CFOs monitor financial reports, make financial recommendations and institute measures to ensure profitability and transparency. They establish the means of measuring financial goals, institute new cost controls and ensure that financial checks and balances properly function.

Basic Finance Duties

Most of CFOs responsibilities are related to financial oversight and management. They are responsible for the forecasting of cash flows and availability based on accounting and investment information. They must develop a capitalization plan and various financial business plan. They perform cost benefit analyses on planned capital expenditures to assist with establishing corporate direction. CFOs evaluate current and future market trends to predict profitability and develop tools and procedures to maximize opportunities.

They also create associated risk management plans and procedures. CFOs lead the way in developing short, medium and long term financial objectives. CFOs evaluate corporate performance, identify positive trends and create tactical and strategic recommendations for corrective actions where necessary. They are responsible to evaluate and make recommendations for reducing the company’s operational risks, costs and liabilities.

Unique Finance Duties

CFOs may be asked to collaborate with the HR director to evaluate yearly salary levels, the accounting director to review billing rates and the procurement or supply chain manager to evaluate costs. They will advise on necessary and alternative adjustments that will keep the company competitive in the industry. When it comes to procurement, they may evaluate and recommend purchase or leases for enterprise-wide systems, software and equipment. Some CFOs are responsible for contract management, so they must review negotiations, contractual terms and contractor performances.

Other CFOs spend more time enhancing financial relationships with banks, finance professionals, regulatory bodies and other financial firms. Some CFOs mainly spend their time with growth planning and implementation plans, which includes revenue forecast and geographical expansion evaluations. CFOs who work for investment firms will provide advice and strategies to improve client account management, investment decisions and corporation operations.

Some CFOs provide advice on the short- and long-term strategies for the corporation’s growth and stock value.

Required Abilities

CFOs need to have business skills for leadership, employee management, strategic planning and resource allocation and coordination. They must have a solid knowledge of economic principles, accounting practices, the financial markets, banking regulations and the analysis of financial data. CFOs need strong communication skills because they must continually read and interpret professional journals, business periodicals and government regulations.

They must have the ability to effectively present information and respond to questions from groups of clients, executives and government regulators. They must have qualitative abilities related to figure calculations, algebra modeling and advanced financial statistics. Computer skills are needed to use spreadsheets, payroll systems, accounting software, cloud-based applications and financial information management systems. Their strong reasoning ability will allow them to quickly define problems, collect data, establish facts and formulate valid conclusions.

Most employers expect CFOs to have an MBA or Master’s in Finance Degree. They should also maintain accounting industry certification, such as the CPA designation. A Chief Financial Officer will need to have at least five years of leadership experience and 10 years of experience in the finance industry.