CFO job description: What does a CFO do?

They have an essential role in helping organisations develop and thrive, but what do these financial people do?

The role of the CFO, the chief financial officer, is among the most senior and important roles within an organisation barring that of the CEO. This is because, naturally, this individual has a handle on a business' finances.

As the title suggests, the CFO is the leading individual within an organisation when it comes to the money - with the role-holder in charge of ensuring all financial matters are closely examined and under control, from company expenditure to how day-to-day business operations affect revenues and profits.

But far from simply serving as the most senior accountant, a CFO often contributes quite crucially to the executive-level decision-making of an organisation, and is a huge part of the overall strategy. Their insight is invaluable, especially when it comes to adjudicating whether ideas are feasible, or suggesting more sensible alternatives.

Most conventional organisational structures will see a CFO report directly to the company's chief, with the two expected to work closely and smoothly given the closeness of their working relationship in terms of achieving the same vision.

But in others, the role of CFO carries more substance than others considered at the top of the executive chain but this, of course, depends on the size of a company and which other senior roles are normally fulfilled. The CFO, for example, may lead the finance department as well as the IT team and the operations department in a smaller business, whereas in a massive company the CFO would normally only be in charge of an organisation's finances.

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As such, the role is varied and the CFO may be expected to oversee the controllership, the treasury, economic strategy and forecasting. In some businesses, this may be known instead as a financial director rather than a CFO, while in others, there will be both a financial director and a CFO, with the former reporting to the latter.

Controllership

Controllership is a major part of a CFO's role. It refers to analysing a company's financial position and reporting back to key stakeholders in the business, such as the board.

Controllership also involves analysing the company's historical data and predicting trends in its financial position. This could be seasonality, looking into how political events such as elections may have affected figures and then feeding this back to everyone in the business and analysts that play a crucial role in strategy.

Any reports the CFO collates must be accurate and allow for swift business decisions to be made by the rest of the business, such as whether investment is needed, new product launches or if other resources are required to support business growth.

The information may also be supplied to third parties, such as external accountants or other businesses, particularly if it is seeking investment or acquisition.

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The information for the reports can be provided by various departments within the organisation, but it is the CFO's responsibility to ensure the data is correct and create actionable strategies from the data.

A larger company will depend on the CFO to present the information to the board on a regular basis.

In some company's the CFO will scrutinise every expenses form submitted by employees - or at least conduct spot checks - to ensure everything is in line with company policy and compliant with any external regulation, too.

Treasury

Treasury duties involve looking at an organisation's present financial condition. This includes the effective management of cash flow and overhead expenses, as well as establishing credit terms for customers and more favourable payment terms from vendors.

The CFO must decide on how to invest money while considering risk and liquidity. An organisation's CFO should also oversee its capital structure, figuring out its equity, debt and internal financing. Fixing problems around capital structure is the biggest job of a CFO.

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A CFO also needs to have effective controls that provide oversight against fraudulent and other criminal activities. A CFO will also be responsible for addressing compliance issues, the most basic of these are filing and paying taxes.

Economic forecasting and strategy

The CFO of an organisation must also look to the future and help in planning its financial future. The CFO needs to find and report what areas of a company are most effective and how the organisation can exploit this information.

Within an organisation, a CFO can help assess output and search for areas of effectiveness that can be grown to further improve success. They can be called upon to exploit their knowledge of markets, funding, and the overall economic outlook to help organisations make better decisions about risk and resource allocation.

What qualifications are required?

The qualifications you need to become a CFO can vary depending on the type of organisation. As their main responsibility is financial management, you would expect a CFO to have experience, training and qualifications in accounting and finance. Larger organisations will often also dictate that their CFO has an MBA and/or advanced degree in accounting, finance, or economics.

A CFO should also have a strong dose of business acumen and nous, as that will help them offer strategic advice backed up by financial knowledge and data that should better aid business decision making. By the time a person has reached the position of CFO, they should already have gained a plethora of business experience. 

How much do CFOs earn?

Like many jobs, the salary you can expect to earn as a CFO varies depending on many factors, including experience, location and sector. Glassdoor figures suggested (last updated in July 2018) that the national average is 115,229, while CFOs working in London can expect an average of 128,466. Some CFOs can earn up to 150,000. 

What role do CFOs play in business success?

As outlined above, the CFO role is absolutely critical to the continued financial health and wider success of any organisation. After all, no company can just spend without making a profit or reinvesting revenue in new product or service areas or innovating. 

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An article by McKinsey & Company, published in July 2018, stressed just how much of a key role CFOs play in a business' wider digital transformation efforts. But, worryingly, not many CFOs realise the need for them to get involved and instead defer responsibility to the CIO or CTO or wider IT function. 

"CFOs must begin to experiment, however, or risk falling behind other functional groups in the organisation and other companies in the industry whose digital transformations are already underway. They might lose a golden opportunity to help drive the business agenda," the article stated.

"A good start would be for CFOs to work with the CEO, the board, and others on the senior leadership team to proactively and systematically identify tasks and processes within the finance function that would most benefit from digitisation. They can then locate and invest in the technologies and capabilities required to improve these areas."

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