We are going to answer the question “What does a CFO do?” I think this is a question a lot of people have. There is no instruction manual for being a CFO. In business school, there is not even a class on how to be a CFO. Looking at the job from the outside it is not really clear what the job entails. What exactly do they do? We are going to answer that question in today’s video. WATCH NOW
An organization will be led by a Chief Executive Officer (or CEO) and then have several Senior managers that report to them. The Chief Financial Officer (or CFO) manages the money for an organization. The CFO must also have a direct link to the board of directors to enable communication about the organization’s finances.
There is an almost endless list of activities that go into managing the money for an organization. It is a very difficult and complex job, but I think all those activities can be summarized into three areas.
Let us start with tasking. As CFO, the CEO and the board will task you with work to do. As a manager, you will then task members of your accounting team with work to do. For example, a CEO has a lot of things to do. They do not have time to sit in front of an Excel sheet and put together a financial report. So the CEO will task that job to the CFO to make sure that the financial report is updated every week. Usually a CFO is also too busy to put together a financial report, so they will task that work to one of their accounting team. Accounting and Finance are full of tasks like this. This includes writing financial reports, invoicing customers, producing payroll, depositing money in the bank, ensuring the department has strong internal controls, just to name a few. Managing money takes a lot of attention to detail and that takes time. The CFO is managing a team of people to perform all those money related tasks.
Next is feedback, it is not enough to simply perform tasks. You also need to provide feedback, not only to the CEO, but also the entire organization. It is important that people know what is going on with the money. Are people staying on budget, or do they need to make changes in their departments to accomplish agency goals? You need to create reports and have communication methods to get that information out. The accounting team has enormous amounts of useful data of what is going on in the business. Other people need that data in order to make good business decisions. So it is important not only to perform your daily tasks, but at the same time, to find ways to provide feedback on what is going on with the money.
And finally is ethics. It is important that there is a strong ethical tone at the top, because there are a lot of ethical pressures when it comes to money. I will tell you what I do, and what I recommend for other organization. You should get your accounting team together and holding an ethics meeting once per quarter. The purpose of this meeting is to discuss ethical issues. This is a very practical thing to do. You want to get your team comfortable with discussing ethical issues and coming up with methods to resolve them. That is a skill your team will use in day-to-day operations. At these meetings you should take no notes, so that people feel like they can speak freely. You can open the meeting with either talking about a news story, or a recent company issue. You can do an ethical related exercise like determining the highest stress points in your department. And then leave the discussion open for people to talk. You will be surprised at the insights your people can provide. It is also refreshing to move forward as a team unified with the mission of performing accounting with strong ethics.
These three areas capture what it means to be a CFO:
Honestly, these three areas describe any manager position in an organization. But because the CFO deals with money, it increases the intensity of all three of these areas. Being a CFO is an important and fulfilling job. I hope this provided you some insight into the day-to-day activities of a Chief Financial Officer.
Leave a comment down below letting me know what you think!
If you find these videos helpful, please subscribe to my YouTube channel.
Neither Zach De Gregorio or Wolves and Finance shall be liable for any damages related to information in this video. It is recommended you contact a CPA in your area for business advice.