What Is a Chief Financial Officer: 5 Things to Know | For a new entrepreneur or high-aspiring financial professional, understanding what a chief financial officer does is important.
After all, this is the main person that’s going to handle the company’s money.
But what is a chief financial officer? What does a CFO’s workday look like?
“Chief financial officer” is exactly what it sounds like, but there’s a lot more to it. There are more reasons why obtaining this position is both impressive and important, even more than one may initially realize.
So keep reading for five things to know about CFOs. We’ll help you realize the importance of their place in a corporate structure.
- The Company’s First Financial Strategist
Companies usually hire teams of accountants who have the training and education necessary for smooth financial operation. A great accountant provides no hiccups at work and can even be the first to detect a company-wide financial problem. It’s why having a great headhunter at your workplace is essential.
But the CFO earns their position by producing big-picture financial strategies that synthesize everyone’s work, including their own. If one person is most responsible for the company’s financial success, it’s the CFO. They’re one of the few people that have the final say in a financial decision and must work daily to come up with a profitable strategy better than the last.
- Always Knows Where the Money Moves
To create the ultimate financial strategy, a company’s CFO must always track the company’s finances. After all, how else will they know which investment opportunities are best? How can they tell what terms are best during merger negotiations?
A great CFO can keep track of the intricate webbing of their company’s cash flow. That way, they understand what financial success and failures are unique to their specific company during that specific time.
- Paycheck-Backed Responsibility
Of course, none of these responsibilities are delegated without reward. In this case, the reward is approximately 42% of CEO pay. The actual salary and the percentage cut may still vary, depending on factors such as company size and general economic health.
Nonetheless, a CFO salary is given with the positions’ responsibilities in mind. For a role of strategic importance, understand the scope of compensation is essential.
- Wear Different Hats
What truly separates a CFO from an accountant are the non-financial matters the CFO must interact with. These aren’t just social calls, either. CFOs are the ones in critical business meetings, speaking to higher-ups in different departments that don’t focus on finances.
This is all vital for their financial work. After all, any basic economic class will demonstrate that finances aren’t only about numbers. Money is a very human topic, and understanding other departments and their goals is important to devise an overall financial strategy.
- Full of Paperwork
Being a “chief financial officer” can be as glamorous as it sounds. But unfortunately, it’s not all action. CFOs must also create financial reports that detail the intricacies of the company’s financial development. Balance sheets, cash flow statements, equity statements — all these are a fraction of the several types of reports a CFO writes.
So, What is a Chief Financial Officer?
If you’re still asking, “What is a chief financial officer?” then here’s the simple answer — the only person in the company that’s trusted to understand and improve every number in the company’s financial books.
We hope that this guide offered an effective introduction to chief financial officer job responsibilities. Check out our other posts if it has! We’ve got plenty of other carefully curated information that keeps readers coming back.