A Chief Financial Officer, or CFO, is the corporate officer with ultimate responsibility for the company’s financial activities. Although CFOs are most common in corporations, it is also possible for non-profit organizations to appoint CFOs to oversee or manage financial operations. This article outlines the major responsibilities of a CFO in day-to-day business and describes the training necessary to become a CFO.
What are a CFO’s Primary Responsibilities?
Generally speaking, a Chief Financial Officer is responsible for an organization’s finances along three separate metrics: managing the treasury of currently available funds, reporting on the past use of funds, and planning for future financial activities. It may be useful to think of the CFO as controlling an organization’s checkbook. Not only does the CFO disburse funds, but the CFO is also the person responsible for maintaining the historical financial records for legal and compliance purposes and for ensuring that future spending is in the organization’s or corporation’s best interest. As part of these responsibilities, a CFO may also be required to prepare and file regulatory reports or statements with the government, shareholders, or even election commissions.
How Does a CFO Work with Other Managers and Officers?
Ideally, a CFO works in close coordination with an organization’s or corporation’s larger management team. Because the CFO controls the purse strings, he or she can help management identify areas of potential growth within the organization. Particularly in small businesses and rapidly growing companies, the appointment of a CFO can also alleviate the strain on the Chief Executive Officer. A skilled CFO may even cultivate leadership teams within the organization or company in order to make operations run more efficiently.
What Kind of Training is Necessary for a Potential CFO?
A CFO is not an entry-level position, and most potential CFOs build a track record over the course of several years. It is particularly useful for a CFO to possess a strong background in accounting, regulatory rules, financial markets, and even information technology. Given a CFO’s position within upper management, it may also be useful to develop leadership skills in varied management positions. By interacting with many different aspects of a company’s business, a potential CFO can cultivate the networking skills that prove useful in navigating a complex organizational structure. Because corporate boards often appoint CFOs, a candidate hoping for internal promotion may also benefit from working on or creating projects that have high visibility with board members. Finally, because a CFO often controls large amounts of money, it is important that any acting CFO have an unimpeachable record of ethics.
As a senior executive, a CFO bears a great deal of responsibility within a company or organization. Given the highly individualized nature of different companies, the path to becoming a CFO may vary widely from place to place. Whether working towards internal promotion, or transitioning from an accounting background into a CFO role, all potential candidates can expect a rewarding professional career and the opportunity to influence an organization at the highest levels of management. A position as a Chief Financial Officer often provides the satisfying opportunity to work at the intersection of business strategy and finance.
You might also be interested in: What is the difference between a CPA, CFA, and CFP?