Each member of the C-suite has a specific role integral to the ebb and flow of a company’s inner workings. The CEO, for example, is one of the more commonly known C-suite roles, and is often regarded as the one with the most responsibility. While the CEO does serve as the face of the company and point person for high-stakes decision making, the role could not be properly fulfilled without the help of the surrounding executive members. One of these crucial supporting roles to the CEO is the CFO, or Chief Financial Officer.
Back in the day, it seemed as if CFOs belonged rather exclusively to large, public companies. Now, however, it’s becoming more common to see CFOs across large, mid-size, and smaller companies—meaning, companies are realizing the value and return on investment of having a forward looking, expert financial adviser on board.
What does a CFO do?
The role of the CFO has previously been broadly defined, but the full picture is becoming more clear as mid-size and smaller companies continue to hire them on. The primary responsibilities of the CFO include monitoring and managing the company’s finance and accounting teams and all financial movement as well as using current financial data to forecast and make financial predictions for the future. This requires CFOs to maintain the accuracy of reports and consult with other executive members to align on strategy.
Not only that, but the CFO is also tasked with meeting (or surpassing) revenue and earnings goals—especially at public companies—and ensuring the good health of a company’s cash flow. And all of this must be accomplished without compromising the quality of the company’s product or service, customer satisfaction, and revenue generation. As you can imagine, CFOs must rely on analytical data rather than “gut feelings” or emotions to power their decisions.
It’s important to note here that while the CFO holds the top financial position in an organization, they are still accountable to the organization which employs them as well as other regulatory authorities, including the Securities and Exchange Commission (SEC) for public companies. CFOs are also generally well-versed in both state and federal regulations as well as generally accepted accounting principles (GAAP).
The CFO also has the ability to influence the technological direction of the company. As digital transformation continues to become table stakes for success, CFOs can use their expert industry knowledge to steer a company to take a specific course. Of course, the deployment and execution of such major financial decisions are not undertaken by the CFO alone—this is where the CFO must assemble and leverage a skilled team of finance experts who can assist with items including budget allocation, human capital management, and the interpretation and analysis of complex data sets.
Honestly speaking, the list of obligations that belong to a CFO is endless. There are a million moving pieces that contribute to the overall picture of a company’s financial decisions. However, on a more general level, CFOs are typically responsible for three major things:
- Maintaining the health of a company’s liquidity, or the abundance of readily available cash or funds to pay off short-term liabilities, and staying on top of financial reporting. By keeping track of financial reports such as balance sheets, income statements, and cash flow statements, CFOs can provide greater visibility into the inner workings of a company’s financial status and performance. Reporting can also help the company identify areas for improvement, what projects to capitalize on or cut back on, and where to allocate more investment or cash.
- Forecast future financial outcomes based on the company’s past financial performance, current state of financial affairs, and internal and external factors. Forecasting can vary greatly from company to company—especially between private and public companies, large and small companies, and more. From the data available, CFOs must present future projections for the company’s financial health, profits, ROI, and more to the rest of the C-suite and board members.
- Increasing ROI-related KPIs for the organization. Each company will have different KPIs and metrics that they track to calculate ROI. It’s up to the CFO to determine whether a project or deal will provide a return that’s worth the investment.
CFO Services from Sorge CPA
At the end of the day, most companies need strategic advisors who can steer them in the right direction—but this direction shouldn’t come from just anyone. CFOs offer the deep financial expertise necessary to help companies make beneficial decisions for both the short- and long-term. While CFOs often hold advanced finance or business-related degrees, the role of the CFO cannot be performed well without critical soft skills as well. Contact Sorge CPA today to find out about services we offer, such as tax management, bookkeeping, and accounting services, providing your business with the skills of a CFO without actually having to hire one full-time!
