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What Is A CFO

Noun 1. CFO – the corporate executive having financial authority to make appropriations and authorize expenditures for a firm. The Chief Financial Officer (CFO) of a company is the person primarily responsible for financial planning and record-keeping.

The CFO typically reports to the Chief Executive Officer, and is frequently a member of the board of directors.

The role of the CFO has never been more important or more broadly defined. Today, the finance organization must forge a proactive, value-added partnership that supports decision-making throughout the company. Traditional accounting and reporting are no longer the primary tasks of corporate finance. The CFO and finance area must transform finance into a shaper of strategy, a source of decision-making information, and an architect of change. The role of CFO can differ from company to company depending on type and size of the business, but one constant is the CFO is an integral part of the senior management team.

A good CFO can look at a set of circumstances and identify the risks and opportunities. They instinctively know what additional input is needed and where to get it to enable their organization to be in a position to make superior decisions. The CFO needs the strength to stand firm even if the message is unpopular. The successful ones accomplish this without becoming rigid. Tact, negotiation skills, and well-developed communication abilities are important for CFOs in building strong relationships both within and outside of their organization. A CFO must understand the non-financial areas of the business – financial plans cannot be made in a vacuum. An understanding of how financial plans will impact the broader organization and how the functional areas will contribute to the plans is critical to their success. And, especially in today’s world, a CFO must have credibility – since the CFO is the financial spokesman and an advocate for the business he or she needs to be trusted. They must set the standard for ethical behavior within the organization.

Whether at a small, mid-sized or large business, the role of the chief financial officer (CFO) in corporate America has changed considerably in recent years. It is no longer good enough to simply be the smartest number cruncher in the world. The CFO today has to be accountable for more than just accounting.

Growing competition, a sharper focus on corporate governance and technological innovation all play a part in radically changing the way CFOs impact an organization. The CFO must have an array of skill sets to survive and thrive. By necessity, a small business CFO is multi-faceted. A good one has lots of first-hand experience wearing many hats including administration, management accounting, production, purchasing, human resources, facilities, contracting, and negotiations in addition to having strong finance skills. Above all, a good small business CFO must be business savvy.

What are the characteristics of the ‘super CFO’? Among others:
  • Deep understanding of the business
  • Knowledge of the high tech industry and market dynamics and operational drivers of success
  • Strong analytic focus
  • Flexibility
  • Communication and team-building skills
  • Customer orientation
  • Appreciation for change management
Additionally, a solid CFO will have the skills and the experience to manage several functional areas within an organization:
  • Finance and Accounting
  • Internal Controls
  • IT
  • HR Responsibilities
  • Legal
  • Customer Service
  • Banking Relationships
  • External Accountants and Attorneys
  • Special Analysis and Reports