What Exactly Does a Chief Financial Officer Do?
If you’re looking to start a career in business or finance, you’re likely interested in where that kind of career path might leave you to. In many cases, the ultimate goal of people who work in these fields is to become the chief financial officer of some large corporation.
If you’re not sure of what a chief financial officer does, there’s a lot to learn. The duties of this position are far-reaching and the benefits many. There’s a lot of responsibility involved with being a CFO, and the roles of a CFO across various industries have some similarities and differences you should be aware of.
Ready to dive in and start learning? Read on and we’ll walk you through everything that you need to know.
What is a Chief Financial Officer?
Let’s start with the basics: what is the chief financial officer job description? What do these people do? A major hint is in the name itself.
CFOs are supposed to be the financial masterminds of the businesses that they oversee. They are in charge of many operations of a company, from managing financial statements to creating strategies, to reporting and adhering to any and all regulations.
We can break some of these tasks down further so that you can understand the position better.
Any large company has a large amount of financial reporting that needs to be kept on top of. All of the company’s financial matters need to be kept up to date and accounted for. Often, this work falls to a large team of dedicated accountants and auditors.
This team, however, reports to the CFO, who oversees these operations and ensures everything is functioning as it should. They are responsible at the end of the day for ensuring these financial reports are compiled and monitored.
Their next task is to use these reports to help oversee the management of the business itself. They will be in charge of overseeing data analysis — looking at these many numbers and drawing important conclusions about the health of the company.
With these conclusions in mind, they will need to assess where the company is in comparison to its stated goals. Depending on how the company is doing, it will fall to them to present new objectives to aim for or alter strategies to change course.
This will be in collaboration with other members of the executive team, though the CFO’s handling of the finances means they will have a very big role to play.
Ensuring Compliance With Laws and Regulations
While not the primary task of a chief financial officer, the other task that many CFOs are in charge of is a state of compliance for the company. All businesses, of course, must comply with laws and regulations found at the city, state, and federal levels.
In some instances, regulations across various countries will be applicable and need to be followed. International trade laws must be adhered to.
This is a lot to stay on top of but is the CFO’s responsibility at the end of the day to ensure a business is operating within the law. Failure to adhere to these laws could result in expensive penalties or even explosive lawsuits. There’s a lot to handle here and it takes up the other side of the CFO’s duties.
Communicating With Shareholders
If the company in question happens to be a publicly-traded company, then the chief financial officer is also typically the one in charge of communicating with the shareholders of the business.
All public discourse between the company and these shareholders tends to be done via the CFO. Any duties related to the shareholders generally falls to the CFO as well.
Becoming a CFO
It can be a long path and many years of work before the title of CFO can be truly bestowed upon an individual. In school, many future CFOs studied finance, business, and economics to lay the foundation of the work they would later pursue.
Often, a person might get a master’s degree in one of these fields, particularly the field of finance itself.
A great entry point into the business is via accounting or finance. There are many entry-level positions that a person might pursue if they were looking to get a foot in the door in the business.
Many students become certified public accountants out of school, though becoming a financial planner or an auditor would also be a beneficial pathway. Those who take to their jobs tend to rise through the ranks over the years, taking over the positions of those above them as they move up or move away.
During this time, they are meeting many other people and building their network of professionals across many industries.
Eventually, a person may rise to the ranks where they can be considered for a CFO position. Generally speaking, this occurs some time after working at a middle or senior manager position.
A promotion to the executive board would be a huge accomplishment and something to be very proud of. Of course, there are also other opportunities out there to look out for.
Many companies cut costs by hiring a fractional CFO, which may be an easier position to obtain. A person who is in middle management at a huge business might look to a smaller company to level up into this position.
Understanding the Chief Financial Officer Role
What is it that a chief financial officer does? If you were unaware of the ins and outs of the position before, the above information should help greatly. Need more business advice and information? Keep scrolling our blog for more.