Chief financial officers (CFOs) play an important role in strategically supporting the chief executive officer (CEO) and their board of directors. However, what exactly is the value expected from a CFO? CFOs play the following role in the organization they are serving:
Planning the Continuity of the Business
Businesses can experience unexpected events. In case of a natural disaster, CFOs ensure that the business can continue to operate without interruptions. They must plan for loss conditions like the inability to access the office for days or the need to hire temporary staff for a certain period. CFOs must ensure the business has enough cash to buy inventory for producing the products the sales force should sell. Without the CFO and sales force partnership, the organization will miss their sales targets. In turn, they will be dealing with angry customers and zero cash.
Managing cash flow and meeting financial commitments are performed by the treasury group under the CFO’s leadership. CFOs should make use of state-of-the-art Gestion de la trésorie system to keep the business floating. They should take advantage of cloud technology to ensure continuity for treasury and other major financial functions. With this technology, mission-critical data are kept away from a physical location. A CFO analyzes the current financial position of the company and market trends in order to implement effective strategies.
Preventing Loss by Managing Financial Risk
In order to add value, CFOs must prevent loss by managing financial risk. This risk includes liquidity, FX, foreign investment, and credit risks. Also, they must pay attention to operational risks. Cybercrime attacks and fraud can lead to significant financial losses and damage to an organization’s image.
Keeping Costs Under Control
CFOs can add value by decreasing costs and improving margins. But, because some CFOs are not able to provide this support to their boards, they must learn how to bridge the gap. They can achieve it by getting a clear view of the cost base of the company and understanding what drives the organization’s profitability.
Giving Faster and Better Data
While an organization grows and changes, their financial system must also change. A great CFO helps in converting a system which can accommodate larger numbers, more data points, and sources, and more sophisticated capital management systems. This ensures they get information in a timely manner. With the CFO supervising the establishment and maintenance of an organization’s financial systems and procedures, they can continue to operate and expand without missing a regulatory beat.