CFO Responsibilities Explained

What does a CFO Do You Ask?

A company's Chief Financial Officer, or CFO, is responsible for managing the accounting and financial aspects of the organization, including the establishment of policies and practices for ensuring that effective financial accounting and management are maintained. Although a CFO may work in a range of functions, the top five responsibilities include: Management of Cash Flow, Supervision of Related Departments, Financial Relationship Management, Liability Management, and Budget Development and Limiting Expenses. The following paragraphs will elaborate on these responsibilities and what these tasks entail.

#1. Management of Cash Flow

Where does the money come from? Where is it being spent? The chief financial officer manages the answers to these questions, as well as establishing guidelines and procedures for bill payment, purchases, credit and collections, and any other financial obligations. The management of cash flow is at the center of all his or her responsibilities. The CFO may also be responsible for developing a model for accounting policies and procedures, as well as handling and dispersing company money and securities.

#2. Supervision of Related Departments

Supervision of the Accounting and Finance departments will be included in the CFO job description, and smaller companies may include the Human Resources (HR) and Information Technology (IT) departments under the supervision of the CFO as well. Any task involving financial management or accounting is controlled by the CFO, including, but not limited to, policies and procedures for spending, purchasing, or hiring, fiscal document security and control, and development of job descriptions and pay grades.

#3. Financial Relationship Management

Establishing and maintaining financial relationships with investors, analysts, bankers, etc., is another key responsibility. While the CFO may share these responsibilities with the company's President and/or Board of Directors, the administration of banking and loan agreements and the maintenance of capital sources for managing accrued debts are tasks handled primarily by the this executive officer. When applicable, the CFO is also responsible for handling the company's investments and providing stock option incentives.

#4. Liability Management

Tax obligations, statutory obligations, lease management, legal contracts, insurance payments, and much more will be present on the CFO responsibilities list as well. Managing the liabilities of the company can come in many forms, and can affect the company's performance and cash flow. Anything that can inhibit company performance and impact cash flow must be managed by the CFO.

#5. Budget Development and Limiting Expenses

In the end, the Chief Financial Officer is responsible for maintaining the company's bottom line. Creating realistic, projected budget plans and overseeing their implementation falls under that category, and that may include finding ways to limit expenses and manage variations between projected and actual performance indicators. Any fiscal research, projections, and analyses fall under the supervisory responsibilities of the CFO.

Certainly, this list may not be comprehensive for an individual CFO position because the responsibilities may vary from company to company. Other CFO responsibilities may include: Increasing Capital, Managing Financial Obligations, Shareholder Communications, and more. While the exact role may change depending on the organization and the fiscal circumstances involved, the above responsibilities are universal and relate primarily to the essential financial functions of any company or organization.