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“Behind every good company, there is a great CFO.”

Crunching figures is only one aspect of being a CFO. Being one of the most significant advisors of the CEO, a CFO brings a great deal of value to the company. A company’s CFO is in charge of developing its financial strategy, driving the firm via finance automation, coaching the accounting professionals to be more analytical and less transactional, and successfully communicating their efforts.

Let’s dig in further to understand CFO and their responsibilities in detail.

Who is the Chief Financial Officer (CFO)?

The CFO is uniquely qualified to bring structure to a complicated system and generate long-term financial success for the organization. The Chief Financial Officer turns their financial skills into a strategic leadership position in order to achieve financial success for the firm and its stakeholders.

Establishing a top-notch accounting and finance team is one of the CFO’s duties, along with maintaining revenue and expense balance, managing FP&A (financial planning & analysis) activities, recommending mergers and acquisitions, securing funding, collaborating with team leaders to examine financial data and create budgets, testifying to the factual accuracy of reports, and providing advice to panels of directors and the CEO on a strategic plan.

On the basis of their financial insights and domain expertise, CFOs may also suggest changes to supply chains and marketing strategies, as well as help determine the future of technology. The most valuable CFOs are visionaries; they look ahead, collaborate closely with senior management, and aren’t afraid to suggest growth strategies.

CFOs carry out a variety of crucial duties. These may consist of:

• Assist the CEO in expanding the company by serving as a right-hand and sounding board.
• Ensure prompt revenue collection. CFOs are essential to a company’s ability to raise money.
• Develop connections with potential cash sources and assist in relieving the CEO of the responsibility of overseeing connections with potential investors, lenders, and important partners.
• Data is used in business more than ever before. CFOs analyze that data and give significant insights.

In brief, savvy businesses today see the CFO job as more of an investment than an expenditure, whether it be internal or available as a virtual or fractional CFO.

Undoubtedly, a worldwide epidemic highlighted the need to have an experienced person in charge of finances. But in our opinion, there is more to the growth of the CFO than just the current financial situation. Let’s examine the job, duties, and abilities that finance chiefs require to be effective in their organizations

Essential Roles of CFO:

• Making predictions

The skill of CFOs to correctly forecast anticipated future events is an essential part of their value to a firm. Importantly, they don’t only report what is. This comprises financial forecasting and modeling based on both internal and external variables that may have an impact on revenue and costs, in addition to the company’s historical performance. It is the responsibility of the CFO to interpret the numerous departmental predictions in order to produce profit projections for the CEO and shareholders.

Although external data sources may include opportunity cost for capital, shifts in demands, rising rivals, and technological advancements, internal factors may include sales patterns, labor, and HR-related expenses, the cost of goods, and more.

• Cash flow

The capacity of a company to settle its short-term liabilities, or those that are due in less than a year, using easily available, or liquid, cash is referred to as liquidity. What the firm owes compared to what it owns is typically stated as a ratio or percentage to represent liquidity.

In order to have enough cash on hand to satisfy financial responsibilities, CFOs are concerned with making sure that customer payments are completed in whole and on schedule.

• Return on investment (ROI) 

ROI measures both the probability of a return on investment and the specific amount of that return. It considers an investment’s return or loss as a proportion of its cost as a ratio.

CFOs provide information to determine if a venture will produce a strong enough ROI to be worthwhile the investment because ROI is a pretty simple KPI that does not take into account all factors, such as net value.

• Reporting

Accounting records, such as balance sheets, profit, and loss declarations, and cash flow statements, assist both internal leaders and external stakeholders in understanding the financial position of the company. It is the CFO’s responsibility to certify that these records are precise and complete in accordance with GAAP.

Despite the fact that only privately held firms with $10 million or more in assets and 500 or more shareholders are obliged to submit financial reports with the SEC, many companies nonetheless prepare these documents so they would be available in the event that the business has to secure a bank loan, venture capital investment, or equity funding.

• Increase Capital

A CFO is essential in assisting you in obtaining funding from banks, venture capitalists, angel investors, and other sources.

You may need a lot of time to complete the lengthy and complicated fundraising procedure. Acquiring an expert on your side is also useful.

Finally, the CFO gives your company more credibility when you ask for funding.

Final Thoughts

A chief financial officer’s expertise should be added as your firm expands.

You still need a CFO even if you can’t afford one or aren’t big enough to support one on a full-time basis. Outsourcing is your greatest bet for this role. The success of your business depends on having someone to mentor or counsel you in all financial problems.

Whether your company is just getting started or expanding, we are here to help you out. We can assist you in answering your questions and guiding you through the process. Contact the Virtual CFO today and get started.