The primary role of a Chief Financial officer (CFO) is to help a company in optimizing its financial performance. A CFO helps in preparing reports of a company’s past financial data. The reporting done by CFOs is used to help the shareholders, employees, lenders, research analysts, and regulatory bodies. The CFO also ensures the company is able to meet its financial commitments and cash flow is managed in the most efficient way. A CFO also makes sure that the company earns the highest possible return on assets. They do the important financial planning and analysis to understand and predict the future cash flow and make risk-adjusted decisions. Apart from this, CFOs are also expected to provide their prowess in company leadership, board decisions, negotiating with suppliers and vendors, and using their financial expertise to monitor the company in its endeavor to fulfill its vision.
With never-ending external influences with prominent and direct risks to the company, a CFO’s role comes under greater scrutiny. CFOs face insurmountable pressures to make decisions on product cost cuts while considering the growth revenue and ensuring control with regards to market competition. CFOs in their reports and decisions need to strongly consider the effects on the vital assets of the company, they need to ensure that the decisions are compliant with financial regulations, and communicate with the board and investors the reason and risks behind each decision made.
CFOs are vital in making financial strategies to grow and direct the future investments and moves of the company. They play a crucial role in aligning the financial decisions with the business vision of the company. No expert can predict a crisis and its effects on the business, while CFOs prepare and delegate for any unpredicted crises they depend on enterprise risk management (ERM) systems that prepare them to help the company in real financial disruptive tragedies.
A CFO’s contribution is not limited by the use of financial data and planning. Another method that CFOs employ to keep the company’s interests ahead is by the use of Nonfinancial data. This includes data like data on the employees’ upskilling trends, which could help the CFOs understand the need and requirements for the implementation of new skills. Another use of the non-financial data made by CFOs is to understand the reliability of the company’s product in tomorrow’s market by using data to predict if the direction headed by the company is providing financial returns, providing a solution which will be in demand, and scalable with changing trends.
This prowess of CFOs was visible in the Covid-19 pandemic. In a Gartner survey about CFOs during Covid-19, CFOs have been found to have shown extraordinary business leadership in times of an unprecedented crisis. In times of crisis, they make decisions keeping in mind other aspects like the safety and gratification of employees. The financial, mental, and health well-being of employees is a significant responsibility of the CFO to ensure the overall functioning of the company by monitoring the financial lags faced due to the effects of a health crisis.
