The five fundamental functions of any CFO
The chief financial officer (CFO) is one of the leading figures in any company. In fact, among all the executives who usually make up its management committee, it is the one with the most multifaceted work. Therefore, it requires a wide variety of knowledge and skills. Thus, you must have legal, commercial, accounting, and tax knowledge; have negotiation skills; know how to manage teams; have leadership capacity; learn about new technologies and their practical applications; have oratory skills … Ultimately, you must develop a wealth of professional skills and all this in order to perform its many functions by fractional CFO. Today we talk about the top five fundamental functions of any CFO.
First of all, we want to comment that, as explained, the company’s administrative area is usually covered under the finance umbrella due to the close relationship that exists with financial and accounting control. Thus, the CFO is in charge of the legal aspects of regulatory regulation, which are very important in some organizations. Furthermore, it directly or indirectly supervises the relationship with third parties: Public Administration, auditors etc.
The CFO also oversees the accounting function. In this sense, it is important to keep in mind that the policies and strategies that are given in the accounting area follow general criteria when integrating into the company’s financial policy. The CFO’s specific function is to coordinate the accounting and financial statements, which must comply with national and international standards.
On the other hand, it is important to bear in mind that the Chief Financial Officer is part of the management team, providing the financial perspective on strategic questions of growth, capital markets, mergers, and acquisitions … In fact, together with the General Management, Chief financial officer establishes the financial strategy to follow, setting the long-term objectives and the corresponding business plans. Thus, it must ensure efficient use of the company’s financial resources, making the most of them. In addition, you should know that you have the maximum responsibility for approving the company’s budgets.
The CFO is also in charge of planning, implementing, supervising, and evaluating the organization’s investments. Thus, it controls from money market accounts to participate in other companies, through bonds. For example, it supervises studies related to the viability of future investments of the company, which implies carrying out a preliminary analysis of the real need to invest, profitability, the possibilities of success, the form of financing.
Lastly, it’s important to note that the CFO is ultimately responsible for the company’s loans and capitalization. Therefore, he is in charge of ensuring that the capital flow of the company, which is essential for its success, is adequate. As they affirm in the article that we have commented before, “it is about responding to the daily and strategic capital needs of the company”.