What Does a Chief Financial Officer Do?

Chief Financial OfficerAnswering the question, “What does a Chief Financial Officer do?”, depends on a number of factors. The basic job description of the Chief Financial Officer (CFO) is to oversee and manage a company or organization’s finances. CFOs can serve in wide array of settings, from small, privately owned companies to major international corporations; they also serve in a range of non-profit organizations, hospitals and health systems, and even branches of the U.S. government, according to Bridegspan.┬áSee the Bridgespan website for helpful information and job descriptions relating to the CFO position.

Because of the diversity of settings for CFO positions, the typical day-to-day duties of a CFO may vary widely. However, there are three basic areas of responsibility common to most CFO positions, according to Investopedia.

Accounting and Reporting: The CFO is responsible for keeping accurate financial records and for reporting on a company or organization’s financial status. In a small company or organization, the CFO may handle basic accounting duties and directly produce monthly and annual financial reports. In a larger corporation, the CFO’s duties shift more toward analysis, oversight, and management. The actual accounting and reporting is done by divisions or departments, with the CFO reviewing these to gain an overall picture of the corporation’s financial status. CFO’s of larger institutions typically present an annual financial report to the organization’s board of directors.

Management and Budgeting: In a smaller organization, the CFO will directly oversee matters like cash flow, salaries and budgeting, and investments. In a small organization, the CFO is often the person who signs employee paychecks. A CFO of a large corporation, on the other hand, will have more of an oversight and administrative role with respect to management and budgeting, deciding on pay scales and allocation of resources based on reports from division managers. The responsibility for a company’s present financial condition pulls the CFO into areas like risk management, investment strategy, and capital acquisition. CFOs often play a role in seeking out capital investment for their companies.

Strategy and Planning: In all types and sizes of organizations, CFOs are increasingly partnering with CEOs and corporate boards to help with long-term strategic planning. Within a company, they help evaluate productivity and search for areas of efficiency that can be developed to further enhance profitability. They are called upon to use their knowledge of markets, funding sources, and the general economic outlook to help companies make wise decisions about risk and the allocation of resources.

Given the range of organizations that employ CFOs, the qualifications expected can vary. Nonetheless, in view of their financial management responsibilities, most CFOs are expected to have training and experience in accounting or finance. Larger corporations and organizations often require an MBA and/or advanced degrees in accounting, finance, or economics.

Related Resource: Become a Financial Analyst

What does a Chief Financial Officer do? Now more than ever, the CFO has a critical role to play in helping organizations and companies grow and adapt in a challenging economy. In essence, he or she keeps an organization going strong.