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.
This is not limited to maintaining the accounts or reviewing the financial numbers. Instead, over the past years, the chief financial officer’s role 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 making 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 company’s financial results 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, and suppliers as chief financial officers are one of the company’s senior-most persons.
Qualifications Required for CFO
In general, a bachelor’s in accounts or finance field or having degrees like MBA, CMA, CPA is considered a criterion for the appointment of a chief financial officer apart from the considerate amount of experience in the finance field.
Skills Required for CFO
#1 – Leadership
The chief financial officer is a senior-level executive expected to lead a team of members, and therefore, it is very important for him that he advises his team whenever required and brings the best out of his team.
#2 – Understanding
He should have sound knowledge and understanding of the company’s business operations to 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 company’s financial growth 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, he must portray good communication skills.
#5 – Technical Knowledge
The chief financial officer shall have sound technical knowledge in 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 statementsFinancial StatementsFinancial statements are written reports prepared by a company's management to present the company's financial affairs over a given period (quarter, six monthly or yearly). These statements, which include the Balance Sheet, Income Statement, Cash Flows, and Shareholders Equity Statement, must be prepared in accordance with prescribed and standardized accounting standards to ensure uniformity in reporting at all levels. to the board of directors.
- To ensure the availability of the funds with the company by making decisions regarding the possible funding (like raising a loan, share capitalShare CapitalShare capital refers to the funds raised by an organization by issuing the company's initial public offerings, common shares or preference stocks to the public. It appears as the owner's or shareholders' equity on the corporate balance sheet's liability side., etc.).
- To prepare the company’s financial budget and ensure that the same is abided by various teams in the company.
- To vet the legal contracts being entered by the company 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.
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?
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.
This has been a guide to the Full Form of CFO, i.e., (Chief Financial Officer) and its definition. Here we learn the qualification and skills required to become a CFO, role, responsibilities, job prospectus of Chief Executive Officer, and Salaries. You may refer to the following articles to learn more about finance –