What is a CFO?
The term “CFO” is an acronym for “Chief Financial Officer,” which is a title given to the person who is in charge of a business’ money and financial matters. Managing cash inflow and outflow is very important to companies of all sizes, and the chief finance officer is the person who oversees and approves these transactions. In some cases, he or she may actually do things like reports and manage payroll; in others, the job is mostly supervisory. CFOs typically bear responsibility for financial matters to a corporation’s board of directors, which makes oversight and solid direction an important part of the job.
The main goal of any CFO is to ensure that a corporation is both profitable and savvy with the money it has. Understanding tax obligations, monitoring necessary expenses, and looking for new forms of investment are all part of the job. This often involves a lot of careful bookkeeping and records scrutiny.
Intersection and Overlap with Accounting Staff
Depending on the company, a CFO may or may not have a direct role in spending allocations. In many companies, these tasks are handled on a day-to-day basis by accounting or other financial staff who prepare exhaustive reports and summaries for the CFO’s review. The executive must review and either approve or reject the resulting documents.
Potential for Liability
In most large corporations, it is all but impossible for one person to coordinate and collect every piece of financial information. It is essential that this information be accurate, however, which is where the CFO’s expertise comes in. In most places, when something goes wrong — when financial publications are incorrect, for instance, or when there are allegations of fraud or embezzlement — the chief financial officer is the first to be held responsible. As such, most officers are very involved in management and oversight, both as a means of saving the company embarrassment and as a way of protect themselves from individual liability.
Becoming a chief financial officer usually requires a great deal of experience with corporate workings, as well as training in finance and money matters. A college degree is almost always required, and most of the highest-paid executives also have business degrees or other advanced certifications in finance and management. Many are certified accountants.
Role in a Small Business
A CFO in a small company is likely to do quite a bit of the hands-on financial work that might otherwise be allocated to lower-level accountants, often as a way to save money. When businesses are young, they often try to minimizing their staff by using the expertise of every team member to its fullest. In some cases, the chief financial officer may, in fact, be the only financial expert on board at all.
Many local and national governments employ a chief financial officer to oversee money issues, primarily as related to taxation. This person is usually the liaison between local residents and elected or appointed officials when it comes to accounting and other spending issues. He or she may set fiscal policy, but typically is only responsible for managing government money according to pre-set mandates and rules.
Place in a Major Corporation
The title of “chief financial officer” usually carries the most prestige in major corporations. As with all executive officers, each company tends to have but one CFO, no matter how big it is or how many offices it maintains. The finance officers of large, international conglomerates are often very busy, but are typically well paid, making the positions coveted.
Role on a Corporate Board
In addition to overseeing financial operations and bookkeeping, one of the chief financial officer’s main responsibilities in a major corporation is board leadership and participation. Most companies are governed by what is known as a “board of directors.” The Chief Executive Officer and the Chief Operating Officer are key players, but the CFO also has a seat — and a vote. In this capacity, the finance officer has a role in shaping the company’s future. He or she may also be called upon to speak to the public or the media about certain financial decisions or changes happening at the company.
How does a CFO reduce costs and increase profit?
best job ever.
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