Full-Form of CFO (Chief Financial Officer)
The full form of CFO is Chief Financial Officer and is is a senior level officer of the company who is accountable for the overall finance functions of the company and has the authority to make the financial decisions for the company.
Role
This is not limited to maintaining the accounts or reviewing the financial numbers. Instead, over the past years, the role of the chief financial officer has diversified and a CFO is expected to utilize his financial knowledge and experience to drive the company towards growth and success. As a result, this can be seen playing the following roles in a company.
- Planning strategies for the growth of the company by taking important and relevant financial decisions. The decisions should be in line with the long-term goals of the company.
- Acting as a leader and taking ownership of the financial results of the company and planning the future course of action.
- Identifying the strengths of the team and utilizing those strengths for the better financial performance of the company.
- Being the face of the company for dealings with the banks, investors, customers as well as suppliers as chief financial officers are one of the senior-most persons in the company.
Qualifications Required for CFO
In general, bachelor’s in accounts or finance field or having degrees like MBA, CMA, CPA is considered a criterion for appointment of a chief financial officer apart from the considerate amount of experience in the finance field.
Skills Required for CFO
#1 – Leadership
Chief financial officer is a senior-level executive is expected to lead a team of members and therefore, it is very important for him that he advises his team whenever required and brings out the best out of his team.
#2 – Understanding
He should have sound knowledge and understanding of the company’s business operations so that he can ensure that correct financial decision can be taken at each functional level.
#3 – Planning
He should be able to make plans and strategize towards the financial growth of the company and ensure its execution.
#4 – Good Communication
As mentioned earlier also, the chief financial officer acts as the face of the company. Thus, while dealing with outsiders, it is very important that he portrays good communication skills.
#5 – Technical Knowledge
The chief financial officer shall have sound technical knowledge in the field of finance so that he can make correct financial decisions.
#6 – Risk Management
Not only a chief financial officer is expected to plan strategies for the future, but it also manages the risk as and when it arises.
Key Responsibilities of CFO
- To review the financial information of the company and present the financial statements to the board of directors.
- To ensure the availability of the funds with the company by taking decisions regarding the possible source of funding (like raising a loan, share capital, etc.).
- To prepare the financial budget of the company and ensuring that the same is abided by various teams in the company.
- To vet the legal contracts being entered by the company so as to evaluate the financial impact and liabilities attached to it.
- To implement finance-related controls in the company.
- To represent the company before the investors and bankers for the possible raising of funds by the company.
- To ensure the improvement of the financial performance of the company by taking necessary measures.
CFO Job Prospects
This is one of the highest and important positions in the company. This is a position that one holds after having so much experience and knowledge. Companies will not let go of their good CFOs even in the hardest economic scenarios as CFOs are those persons who can plan to move the company away from the financial tension. Thus, job prospects are very bright for CFOs as almost every company hires a CFO to head their finance division.
CFO Salary
As stated earlier, the chief financial officer is one of the top positions in the company. Being such an important position, These are highly paid employees of the company. As per one survey, the average salary of a chief financial officer is the U.S. comes out to a whopping amount of $3,71,548 as of April 2019. Quite interesting, right?
Conclusion
Becoming a chief financial officer of a company will take a lot of experience and knowledge. The efforts that you make to reach there will surely be worth it. Also do not forget the important responsibilities that await a CFO.
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