All about Chief Financial Officer (CFO)

The Chief Financial Officer (CFO) has to play a multi-dimensional role today amidst numerous challenges ranging from the changing facets of the Indian economy to stricter compliance regulations. Conventional finance functions such as record-keeping, financial reporting, and statutory compliance continue to be crucial, but there has been a profound transformation in how it works and is managed. 

A forward-looking CFO of today must be able to use financial data to influence operational decision-making and strategy with advanced technologies. Continue reading to unearth the roles and responsibilities of a modern CFO.

CFO Meaning Explained

‘Chief Financial Officer’ is ‘CFO full form.’ A CFO is a corporate title given to the Key Managerial Person (KMP) responsible for managing the company's financial operations and strategy. 

The CFO is usually a high-ranking position, reporting directly to the CEO. A CFO has powerful inputs for the company’s capital structure, investments, money management, and long-term business strategy.

Landing a CFO role requires one to demonstrate abilities with a long-term commitment. The following steps may help aspiring finance professionals become CFOs-

• Obtaining a relevant Bachelor’s degree, such as in accounting or finance, or an MBA holder specialising in accounting or finance may climb the ladder to become a CFO.
• Get a professional certification, Like a CA, CPA, or CMA, in addition to college to develop leadership and strategic planning skills.
• Obtain experience to prepare for decision-making in IT, human resources, supply chain, investor relations, and operations rather than just accounting.
• Develop management skills by sharpening skills while in college to enhance your ability for polished communication and well-articulated goals, effectively cast vision, and manage projects. 
• Build a solid track record of a career that can speak for itself. It needs one to think strategically about where to work and how to build a network. Usually, a person is around their 50s when they take the CFO's seat, but these days, virtual CFOs have taken a trend where a person can become CFO without waiting for a promotion.

CFO Qualifications and Skills

CFO qualifications and skills include the following-

• Bachelor’s degree in accounting, finance, or any related field 
• Professional accounting designation such as CA, CMA, or CPA
• Over 10 years of experience in a senior financial management position
• Advanced computer skills that include proficiency in MS Office and Microsoft Dynamics SL financial reporting software
• Exceptional communication skills
• Result-oriented, a strategic thinker, and good planner
• Have visible leadership skills and influencer

CFO Roles and Responsibilities

A CFO typically performs these roles and takes up the following responsibilities-

• Created the financial strategy of the company
• Manages the financial controls and accounting processes
• Ensures complete transparency over the financial performance 
• Provides advice on ways to increase revenue and reduce costs
• Effectively and timely communicates with clarity about potential risks
• Suggests action plans to ensure that annual financial objectives are attained
• Supports the CEO in preparing the monthly and annual financial plans
• Maintains speed and accuracy in invoicing and client payments
• Ensures by overseeing if the teams have complied with various statutory/regulatory requirements applicable to the organisation
• Coordinates and produces all the required tax documentation 

While we have learned about the conventional roles and responsibilities of a CFO, let’s see what a modern CFO must prioritise. A forward-looking CFO must be able to use financial data to influence strategy and operational decision-making.

A modern CFO must ensure that the finance function is essentially embedded throughout the business operations. Further, they must establish access to timely and accurate data as it becomes a pivotal enabler for finance productivity and decision support. 

Automated reporting and analytics help finance leaders dedicate more time to strategic planning, such as forecasting and predictive analysis, rather than conventional CFO functions in finance. The use of advanced technologies is, therefore, critical for modern CFOs.

Investment in digital technology helps manage complexities and drives productivity. The CFOs must raise their game in managing, analysing, and presenting data most effectively and efficiently.