What is a critical marker in determining the success of a business? It's financial performance, of course. So who works tirelessly behind the scenes to ensure an organisation’s finances are in tip-top shape?
This critical task is the domain of the Chief Financial Officer (CFO).
A CFO steers the company’s finances through all weathers to reach its destination: financial growth. Their invaluable insights and strategies are critical to helping a business scale new heights.
The CFO holds one of the topmost positions within the upper echelons of an organisation’s management. With ever-changing business dynamics, increasing financial risks, and a volatile policy landscape, the CFO can act as an anchor to tide through financial storms. Over the last few decades, their roles and responsibilities have expanded and become even more integral to running a well-oiled organisation.
Curious about this top executive’s role and its responsibilities? Let’s give you a breakdown of the intricacies of being a CFO and what they do.
Who is a Chief Financial Officer (CFO)?
A Chief Financial Officer (or CFO) is a top-level executive holding the highest rank within an organisation’s financial department.
The CFO is responsible for managing an organisation’s finances and financial activities to ensure its fiscal health.
Part of the esteemed ‘C-suite’ (the ‘Chiefs’ or executive-level managers of companies), the CFO works closely with the Chief Executive Officer (CEO) to brainstorm financial strategies and innovations to achieve financial growth.
With rapid advances in technology and volatility in the economy, the role of a CFO has transformed from a mere number-cruncher to a strategic partner to the CEO. Today’s CFOs wear multiple hats within an organisation. They act in the capacity of a risk manager, strategic planner, financial advisor, spokesperson, and financial steward and operator. Most importantly, they are business leaders who are catalysts for the growth and development of a business.
Let’s look more closely at their roles and responsibilities.
Roles and Responsibilities of a CFO
The CFO of today’s companies has to juggle several roles and responsibilities.
Take a look at the roles and responsibilities of a CFO:
Oversee the functioning of financial departments:
The CFO oversees the overall operations of the financial department and assesses its performance. These departments include accounting, budgeting, compliance, auditing, and other finance operations. The CFO is the glue that holds them together.
Perform treasury duties:
The CFO has to ensure the optimal management, distribution, and investment of funds to ensure a healthy capital structure. They make policy decisions regarding the company's financial structure to maintain a healthy balance sheet with profitable cash flow and liquidity.
Analyse and present financial data:
The CFO oversees the company’s finances and delivers financial information to all stakeholders. They are responsible for providing accurate financial data, looking at past performance, analysing the company's financial health, and strategising for the future.
CFOs are not simple number-crunchers. They are strategic partners in spearheading innovations, mapping action plans, and providing financial leadership that promotes dynamism and change.
Collaborating with the C-suite:
CFOs are top-level executives who have the ears of the CEO. They also work in close association with the other ‘Chief’ designates, including the Chief Product Officer (CPO), Chief Information Officer (CIO), and Chief Operating Officer (COO). They collectively make decisions regarding the most critical company policies and objectives.
Financial risks can cripple a company without competitive management. This is where the CFO comes in. They are responsible for financial risk management within an organisation. It involves identifying, assessing, managing and monitoring risks.
Liaison with financial actors:
A part of the CFO’s role is to build relationships with financial actors beyond the company to ensure its financial security. They liaison with bankers, lenders, investors, shareholders, hedge fund managers, and more.
Non-compliance with regulations and policies can get companies into serious hot water with the authorities. The CFO ensures that the company is updated on regulations and ensure that they are strictly observed.
The roles and responsibilities of a CFO are multifaceted. As the position gains even more importance with time, the qualifications to achieve the seat at the table as a CFO will get increasingly difficult. CFO certification courses have become very popular to equip CFO aspirants with the skills and requirements of the job.
How to become a CFO?
With one of the highest-paying positions in the company and an esteemed place in management, the role of a CFO is a highly coveted one. But becoming a CFO is not a cakewalk. You need to demonstrate that you are capable of taking on this leadership role.
Here are the requirements for becoming a CFO:
An educational background in finance, business, accounting, economics or management is generally a prerequisite for becoming a CFO. Your best bet is, however, a bachelor’s or master’s degree in finance or accounting to get on the path to becoming a CFO. A postgraduate degree in these fields can greatly improve your chances by building strong foundational knowledge.
Get professional credentials like the Certified Public Accountant (CPA) certification, Certified Treasury Professional (CTP) certification, CMA (Certified Management Accountant) certification or Chartered Financial Analyst (CFA) certification. These qualifications will help you grow in your career.
Gain industry experience:
Industry experience is essential to becoming a CFO. Gaining industry experience of about 10 years cements your practical knowledge of the workings of the space. The exposure is critical to the development of insider knowledge that can shape critical insight for a company’s growth.
Experience in managerial roles:
A CFO is a leadership role, and assuming responsibility as a manager can advance your chances of becoming a CFO. It helps you demonstrate your management and leadership capabilities.
A CFO should demonstrate soft skills to shoulder the demands of the job. They should have leadership skills, critical thinking ability, problem-solving expertise, conflict resolution ability, and good communication skills.
Upskill with Chief Financial Officer courses:
Take advantage of the Chief Financial Officer courses to upskill for career development. Elevate your potential with IIM Indore online courses for future CFOs like the Postgraduate Certificate Programme for Emerging CFOs. This specialised financial program, developed by IIM Indore, is among the best Chief Financial Officer course to upskill.
The office of the CFO is one of the most powerful within any organisation. They shoulder the immense task of managing and securing a company’s financial future. CFOs study the past, assess the present, and forecast the future of the company through finances. The roles and responsibilities of the CFO provide the company with a strategic and innovative partner to reach new heights of success. It’s not surprising that future candidates are actively seeking the best CFO certification courses to secure these positions.