What Does a CFO Do?

CFO, CEO, CRO, CMO, COO, it seems like the list never ends for these C-level executives. Knowing what role each person plays in the company can be challenging, whether it’s your first day or your fifteenth year. 

If you have set your heart on the CFO position, but you aren’t quite sure what the job entails, keep reading. We’re going to look at the Chief Financial Officer role and answer that burning question in your mind – ‘What does a CFO do?’ 

What Are C-Level Executives?

Many titles are thrown around in the business world, but none as globally recognized as C-Level Executives. 

Each executive has a significant role within a business organization. They lead an entire department such as finance, marketing, and IT. Because they are the leaders of their department, any decisions they make tend to impact the whole company. 

Any person to hold a C-Level role must have extensive experience in the department they lead. For example, the CFO must have detailed knowledge of anything related to finance and accounting. 

If you think you have to be born with C-Level qualities to make it to that level, you’re wrong. Over the years, as you gain experience in the workplace, the focus should be on developing skills critical to the role. These include leadership, critical thinking, decision-making, and conflict management skills. 

Traditionally, companies have a pyramid-shaped hierarchal system. At the top of the pyramid, you have the board of directors and founders. The C-Level Executives fall right under them.  

What Does a CFO Do? 

In one sentence, the role of the CFO is to manage the company’s financial risk. Simple right? Not exactly. 

The CFO’s job is highly complex. Their duties aren’t only to decide when and where to invest company funds. But they also hold responsibility for the company’s past and future financial situation. And it doesn’t end there. 

The CFO’s duties also include confronting any incoming issues around capital structure. If a company shows any sign of growth during the financial year, the CFO likely had a large hand in it. A competent CFO must have the ability to identify which area of their company is being most efficient and come up with ways to capitalize on it. 

Take Apple, for example. The current CFO’s job role involves identifying which Apple products are the most profitable and how to use that information to benefit the company’s future. 

The CFO oversees their department, especially so during reporting season. This is when their team prepares the company’s financial documents to present to all employees, shareholders, lenders, government agencies, and regulatory bodies. All reports must be completed in a timely and accurate manner. 

It sounds like the role of the CFO is essentially paperwork. You might be correct, but it involves a lot more. A CFO is also engaged in negotiations, leadership roles, communicating with the board of directors, and supporting the company. 

The Chief Financial Officer in a Startup

In a startup environment, a CFO’s duties aren’t set in stone. 

The third highest-ranking officer, the CFO, is centered around finance and accounting at a traditional company. However, in a startup environment, they may have to take the reigns of HR, fundraising, and expenses. 

Generally, in a startup environment, a CFO isn’t in the picture for several years. But when they’re finally brought in, they may be the only ones on the team with any financial experience. Of course, a CFO’s duties at a startup focus mainly on the company’s finances. 

These responsibilities include accounting, taxes, reporting, and cash management. The first and foremost job of any CFO in a startup is to ensure that their finances are being cared for.  

A giant corporation usually has a separate HR team. However, startups with minimal funding usually have the CFO fill the role. Because they are in charge of finances, and payroll being the most significant expense, it makes sense. 

The CFO title is slowly evolving into CFOO – Chief Finance and Operations Officer at many smaller companies. This means that the CFOO is in charge of the company’s finances and oversees all company processes. 

Like any senior management role, there are key characteristics to watch for when selecting and CFO. Extensive management experience and finance knowledge are a given. In a startup, the CFO must act as a business partner as their role is significant to a growing company. They must also be an exceptional leader, strong communicators, and fit within the startup’s culture. 

If a company’s founders cannot find someone to function as their CFO, they’re able to recruit one through sites like https://finvisor.com/, https://www.fbkcpa.com/cfo-on-demand/, and https://www.cfoon-demand.com/.

Good Vs. Bad CFO

An excellent, efficient CFO should have a vision for where the company should be in 24 months. This is to help the company’s scalability and prevent any stagnancy. There’s a good reason that a CFO is third on the ladder in the C-Level Suite. 

They’re not only viewed as experts in financial matters but also as strategic partners in the long-term growth of the company. 

Talking about finance to those who are more creative-minded may put them to sleep in a meeting. So a good CFO must be able to speak visually, not only analytically. 

Being a CFO means to a risk manager. That is to factually and ethically report the numbers. A bad CFO will do the exact opposite. They’ll manipulate the numbers to their benefit and look for any loopholes available. 

A company with many Chief Officers of their respected department will also respect boundaries. They will not advise a department they are not an expert in. 

The Bottom Line

A CFO’s role in a long-standing or startup company is crucial to its success. While it may seem like loads of paperwork, a CFO’s duties can wildly vary and be responsible for many different departments at a given time. 

If you’ve enjoyed reading this article, “What does a CFO Do?”, then we invite you to take a gander at our other articles.

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