CEO discussing role of CFO | What does a CFO do? | Focused Energy Finance & Accounting Services | Denver, Boulder, Colorado

What Does a CFO Do?

A CFO plays a vital role in any company. They oversee the company's financial health, managing risk and ensuring that all money is handled correctly. They also serve as a liaison between leadership, the board of directors and the rest of the team for financial communications and strategy. If you are interested in the role of CFO or want to know more about CFO services, this article is for you!

Let's start by discussing who a CFO is and their place in a leadership team.

CFO vs CEO

The roles of a CEO and CFO are sometimes misunderstood.

The CFO, or Chief Financial Officer, is tasked with overseeing all financial aspects of a company. They are responsible for maintaining and improving the company's finances, including its profits and losses, as well as its cash flow and debt. A CFO is also responsible for managing the company's accounting department its financial data, processes and policies, as well as providing regular financial reports to stakeholders and investors.

The CEO, or Chief Executive Officer, is in charge of running the business itself. They oversee all day-to-day operations within the business and have ultimate authority over hiring and firing employees within their organization.

In many ways, their relationship is similar to that of an attorney and their client: attorneys provide legal advice to their clients so that they can make informed decisions about their situation.

While both positions are important for ensuring that a business succeeds, they have very different responsibilities—and you should know how to tell if you need someone in one job or both!

Now let's look in detail at the CFO's responsibilities.

What does a CFO do?

The role of a Chief Financial Officer (CFO) is to provide financial clarity and support to their company's leaders. CFOs are often responsible for overseeing the company's finances, providing guidance on how much money they have, where it comes from, and how it's being spent. At the most basic level, they make sure their company stays in compliance with regulations and laws regarding taxes and accounting.

However, a good CFO is so much more than that.

Being a CFO usually means having a background in accounting or financial management and an advanced business degree (MBA). But it also takes plenty of soft skills. In fact, the CFO frequently serves as a liaison between leadership, the board of directors and the rest of the organization.

So, they need to have a strong understanding of financial concepts and apply them to real-world situations that affect the business. They also need to be able to communicate effectively with other members of the team, departments and leadership.

It's important for business leaders to understand when they should hire a CFO in order to maximize efficiency within their organizations.

Related reading: benefits of a fractional CFO

When to hire a CFO

As a business leader, you may be wondering when you should hire a CFO. What informs the need for a CFO is less company size than a desire for a strategic adviser with deep financial expertise.

There are several good reasons why you might need one:

  • You're growing quickly, so you need someone who can keep up with your growth patterns and help you plan realistically for the future
  • You want someone who will work closely with your management team to make sure everyone is on the same page when it comes to critical financial matters
  • You want someone who will help you develop strategies that align with your long-term vision for your company

Most companies do not start with a CFO on staff. However, having financial guidance from an industry professional will help you grow your business.  Instead, they can utilize fractional CFOs --- CFOs that work on a part-time or fractional basis -- to provide critical expertise.

Duties

The role of a CFO typically falls into two main categories:

  • Financial management. From supervising all the personnel working in the financial department to preparing the organization's financial statements, the CFO is responsible for all things finance.
  • Strategy and business advisory. The CFO is also responsible for advising the CEO and other members of senior management on how to invest or manage the organization's financial resources.

CFOs put complex data — current, past and predicted financial results — into perspective. They help the CEO make sound financial decisions, e.g., should we introduce this new product or service? What are the tax implications of our employees working remotely? Can we afford to on-shore our supply chain?

This forecasting is essential for ensuring the company can marshal resources for expected growth. Here are some other examples where CFOs play a key role:

Related reading: A Guide to hiring a CFO

Regardless of the stage of your business, outsourced CFOs can help you take considerable strides with their actionable recommendations. Interested in learning how? Contact Focused Energy today.

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