Finance holds great importance in every sector from the start of a business to the progression and forward. The finance department is not all about signing checks and handing them out, it’s much more than that.
IDG Pakistan conducted a session on the 15th of May 2014, on demystifying IT in the finance department, an intense discussion among the CFOs from different organizations. This session talked about the changing trends of a CFO and the risks and challenges faced and the possible solutions for it.
Here is where the main issue lies at, when an amount is quoted by the IT department on how much expenditure has been carried out in buying more machinery, software or whatever the desired departments require in adding value to the overall output generated by the organization.
A corporate officer is primarily responsible for managing the financial risks of the corporation. The responsibilities further include financial planning and record-keeping, as well as financial reporting to higher management. In some sectors the CFO is also responsible for analysis of data. Directly gives assistance to the Chief Operating Officer (COO) on all strategic and tactical matters as they relate to budget management, cost benefit analysis, forecasting needs and the securing of new funding.
Also known as a financial gatekeeper, the role of the CFO has expanded and evolved to a strategic partner and advisor to the CEO.
The CFO of tomorrow should possess the qualities of a thinker who looks at the larger picture, as opposed to detail-oriented, be outspoken rather than reserved, should opt to delegate rather than be hands-on, emphasize what gets done rather than how things are done, and make collaborative rather than unilateral decisions. The need arises for a CFO especially in light of the highly uncertain macroeconomic environment, where managing financial volatilities is becoming a centerpiece for many companies’ strategies.
The CFO must ensure the integrity of fiscal data and modeling transparency and accountability. The CFO is as much a part of governance and oversight as the Chief Executive Officer (CEO), playing a fundamental role in the development and critique of strategic choices. The CFO is now expected to be a key player in stakeholder education and communication and is clearly seen as a leader and team builder supporting the CEO directly and providing timely advice to the board of directors.
The senior manager is responsible for overseeing the financial activities of an entire company.
In today’s time the role of the CFO is under greater scrutiny, both, internally and externally. They face never ending pressure to cut costs, grow revenue and ensure control. Economic uncertainty, increased regulatory requirements, financial restatements and increased investor scrutiny have forced them into the spotlight. Given the following factors that lead to finance execution, CFO turnover is on the rise.
Catalyst – Execution
Strategist – Performance
Steward – Control
Operator – efficiency
As pointed out above, they play four diverse and challenging roles. The two traditional roles are steward, preserving the assets of the organization by minimizing risk and getting the books right, and operator, running a tight finance operation that is efficient and effective. It’s increasingly important for CFOs to be strategists, helping to shape overall strategy and direction, and catalysts, instilling a financial approach and mind set throughout the organization to help other parts of the business perform better. These varied roles make a CFO’s job more complex than ever.
Here is the list of work done by a CFO.
Controllership duties – These include presenting and reporting accurate and timely historical financial information of the company. Every stakeholder in the company – including shareholders, analysts, creditors, employees and other members of management – relies on the accuracy and timeliness of this information. It is essential that the information reported by the CFO is accurate, because there are a lot of decisions based on it.
2. Treasury duties – Also responsible for the company’s present financial condition, so the CFO must decide how to invest the company’s money, taking into consideration riskand liquidity. Moreover they oversee the capital structureof the company, determining the best mix of debt, equity and internal financing which highly important.- Economic strategy and forecasting– Not only is a CFO responsible for a company’s past and present financial situation, the individual is an integral part of a company’s financial future. A CFO must be able to identify and report what areas of a company are most efficient and how the company can capitalize on this information. For example, the CFO of an auto manufacturer must be able to pinpoint which models are making the most money for the company and how this information can best be used to improve the company in the future. This aspect of a CFO’s duties also includes economic forecasting and modeling in order to ensure the company’s success in the future.
The CFO’s job with the role being evolved is a very complex one. All the information mentioned above is easy to read through but a tough task to carry out and keep up with, for progression of the business. To be able to project the long-term financial picture of the company and by how the company thrives based on the analyses of a CFO is the hint of an individual who is an expertise and living up to the designation.
