First things first: What exactly is a CFO, or Chief Financial Officer responsible for, anyway? According to Investopedia, A CFO is a top-level executive responsible for managing the finance and accounting divisions and for ensuring that the company’s financial reports are accurate and completed in a timely manner. Basically, anything money-related falls under the jurisdiction of a CFO, and they have the power to delegate jobs to other employees if needed. However, “anything money-related” is quite broad, especially if we’re talking about businesses, so let’s narrow this down and pick it apart. Which departments fall under the CFO’s responsibility?
Finance and Accounting
This is the department to which the CFO is most closely related. It’s easily the center of any organization and is responsible for making sure that financial management is efficient enough to support all business activities. The employees in the financial and accounting department measure and interpret all manner of financial activities, both short and long term. The CFO’s guidance here is crucial, as they usually come with the knowledge and experience required to interpret this data correctly in favor of the company.
Financial Planning & Analysis (FP&A)
While this isn’t a department in and of itself, it is such an important factor in a business’s success that we tend to make it its own department. CFOs usually have a degree in finance or economics and have the Chartered Financial Analyst designation while often taking courses in accounting, analysis, and investment banking as well. All of this theory comes into practice during the financial planning stage of business, and can often make or break a deal, causing even large enterprises to go under if not done properly.
Business Partner with the CEO
Along with the Chief Operating Officer, the CFO advises the CEO on financial matters. This can range from past mistakes (that we should all learn from) to long-term strategies that won’t see gains for years. CFOs also tend to work closely with the CEO as most matters have to do with budget, taxes, and financial risk anyway. Speaking of taxes…
Legal
The CFO is well-versed in the world of taxes. Since a CEO with a foggy idea of how taxes work can end up paying thousands, if not millions more than they should, a CFO should always be present to help the business with taxes. This includes write-offs, deductions, and itemizing properly to avoid issues later on. If you’re not sure how to manage a business’s taxes (or if you’re self-employed), ask a CFO for help! And if you’re the owner of a smaller business, don’t be afraid of hiring a fractional CFO for some extra cost savings.
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