In the article it is spoken about The job description of a CFO (Chief Financial Officer). The Chief Financial Officer, commonly known as the CFO for short, is responsible for the financial management of the company. Although, he/she reports to the CEO, there is another level of accountability in this function, as knowledge of tax laws, legal financial reporting methods, and other government mandated regulations impact the way this job is conducted. Since the CFO directly influences the financial statements by reporting methods and Generally Accepted Accounting Principles, this position is indeed very important to the lifeblood of an organization.
Bookkeepers, junior accountants and other financial related personnel will report to the CFO. In very large corporations, there may be supervisors and department heads (accounts receivable manager and accounts payable manager) who oversee specific areas reporting to the CFO. The CFO generally makes initial decisions regarding accounting software, billing cycles, audit procedures, type of financial reporting, divisions between duties, which customers may receive credit and how much, as well as signing all checks either independently or in conjunction with the CEO.
The CFO is responsible for setting up checks and balances to ensure that one person does not have complete control that would allow fraudulent activity, and so that employees are not in a position to impart private data regarding a company’s financial situation, employee payroll, its suppliers, its customers, and other sensitive information that would easily be available in the ledgers or books.
Further, the CFO will make the COO aware of cost overruns and keep him/her abreast of any budget issues that might arise. The CFO will create regular reports with respect to certain aspects of the organization. For instance, the board of directors will require overall reports on the financial health of the organization, whereas department managers would only see numbers that reflect their assigned areas. Should the company require financing or other forms of credit, the CFO will prepare the necessary documentation for banks, other lenders, and potential investors.
In addition to income statements, the CFO will set up regular reports to analyze specific functions of the organization. For example, to determine whether raw material costs have increased significantly or whether they remain within an allowable percentage. Aside from being mathematically astute, the CFO will have an excellent sense or feel for changing numbers. He/she will be able to review numbers in an attempt to discover patterns and trends, which lead to potential problems and ultimately opportunities to increase margins, cash flow, and overall profitability.
Interestingly, the CFO is usually responsible for licenses, permits and other documents that require updated registrations. This is normally the case simply because the accounting department receives the bills (invoices) from the various local, state and federal departments. In addition, the chief financial officer may be responsible for negotiating better contracts with suppliers. If for example, a new telephone system is available at considerably reduced costs, then the CFO may present the financial data to other members of the company to make a decision to change the phones.
Many times, in smaller organizations that have no Human Resource Manager, the CFO will be responsible for choosing companies that supply employee benefit packages such as health insurance. In large corporations, human resources and the CFO may work together.
Basically, the CFO provides a support function to the organization by providing suggestions and identifying problems, but he/she is also an essential component of the company because people must get paid and governments have accounting and tax laws.