What Does a Chief Financial Officer (CFO) Do? Overview of the CFO’s Responsibilities

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Working in organizations or companies, everyone has their job roles from regular employees officers, manager, vice presidents, and then the chief officers. There are different chief officers such as the Chief Executive Officer (CEO), Chief Marketing Officer (CMO), and the Chief Financial Officer (CFO).

It varies per organization on the role name and job duties and responsibilities for but on a general scale, companies usually have a CFO. They carry out important tasks for the company such as overseeing the company’s financial situation and transactions. Below are more details on the job role of a CFO.

What is a CFO? 

The Chief Financial Officer, or CFO for short, is an executive-level position within a company. The CFO’s job is to handle all of the financial aspects of the business and ensure that it is operating efficiently. A majority of their time will be spent in meetings with other executives, discussing finances and making decisions that could potentially have a large impact on how successful the company becomes. The Chief Financial Officer also has knowledge to answer any questions from employees about money-related issues such as salary negotiations. 

The outline above is just a small look into the Chief Financial Officer’s responsibilities. In reality, their job can be much more complicated than what you’ve read so far above. More specific tasks will depend on the company and its size. However, one thing that they never do is handle any type of customer service or sales-related duties as these fall under another department altogether — typically marketing in larger companies but individual departments for smaller ones.

What does a CFO do? 

1. Reporting past and current performances

In order to perform this responsibility, the CFO’s day-to-day tasks are largely focused on financial reporting and analysis. This includes managing budgets, analyzing expenses against profits, producing year-end reports for investors as well as quarterly updates that help management make decisions in real-time. Their reports also take into account stakeholders such as the government, regulatory bodies, research analysts, lenders, and of course, employees. 

2. Analyzing the liquidity of the company 

Liquidity is a must-have for any company. The liquidity of an asset refers to how easily you can convert it into cash. When you own a liquid asset, like money or shares, it’s easy to turn them into cash quickly and without too much effort. On the other hand, if you own an illiquid asset such as land or property, then it’s difficult to sell for cash quickly. There are two types of liquidity: funding liquidity and operating liquidity. Fundamentally, these terms refer to the ease with which assets can be turned into money when they need funding or during normal operations respectively.

A CFO makes sure that the company has the cash they need to survive and thrive. The job of a CFO requires more than just being an accountant, it also includes managing risk and overseeing investments so they would know how capable the company is in issuing loans, managing investments, and handling other liquidity-related concerns. 

3. Calculating the ROI of the company

An ROI or the return on investment is the measure of how much return a business receives from an investment. This can be expressed as either a monetary (peso) amount or, more commonly, as a percentage. An ROI measures the efficiency and profitability of an investment. If you invest P1000 in your company but only earn back P500, then your ROI would be 50%. 

When used in financial planning and analysis, it typically refers to cash flow: how much money came into the business minus how much was spent out of pocket over a period of time. Businesses use this information to help forecast future performance and compare actual results against budgeted expectations. Hence making one of the most important things that any CFO must do for the company is help maximize ROI.  

4. Managing risk level of the company 

They also have other important responsibilities such as ensuring appropriate risk levels within their company by evaluating plans like investments or acquisitions. They may also be responsible for helping with board meetings related to budgeting or financing matters depending on the industry type of an organization.

The list above is so far only an overview of what a CFO does and surely is not the entire list yet. A CFO is an important part of a company. The role can be overwhelming for those who are new to it especially if you’re in a position for a big company. But again, the job description may vary per organization. 

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