Defining what a CFO does

We get that question frequently, often from entrepreneurs who are growing their business. They are familiar with bookkeeping and perhaps accounting, but often not with true CFO-level financial management. The core responsibilities of a CFO might be summarized as follows:

  1. Accounting for transactions and economic events (usually through use of or supervision of an accounting system and related personnel)
  2. Financial Planning and Analysis (helping the rest of the management team understand what the historical financial statements and reports are telling them and how to apply that information to set plans and budgets and support operational decisions going forward)
  3. External Financial Reporting (in addition to information for internal use, prepare financial reports for lenders, board member, shareholders and other outside stakeholders)
  4. Cash Management and Forecasting (along with Borrowings from lenders, these are the core of the ‘treasury function’)
  5. Pricing and Cost Analysis (analyzing profitability by product, product line or customer for existing or proposed business)
  6. Strategic and Financial Planning (combining the deliverables above and teaming with all other executives to set the strategic and tactical plans for the enterprise)

The CFO frequently has managerial responsibilities (directly or indirectly) for other infrastructure functions within an enterprise, such as:

  • Information Technology (IT) Development and Management
  • Shareholder Relations
  • Human Resources
  • Risk Management and Governance

Properly delivered, these contributions by a skilled CFO are critical to a company’s growth, profitability and increasing enterprise value!