The Role of the CFO in Profitability

Finance Director, Finance Manager, Global CFO, Chief Financial Officer and Profitability

The Role of the CFO

A Chief Financial Officer (CFO) is a key member of the Executive Committee that usually includes the Chief Executive Officer (CEO) and the Chief Operating Officer (COO). The CFO’s primary responsibilities are to act as the guardian of the company’s financial resources, to be the Board’s primary strategic advisor, and to report to the CEO and the Board of Directors regarding the health of the enterprise’s finances.

The CFO’s Expanding Role

Traditionally, a CFO acted as a guardian of the company’s funds. They were a “bean counter” whose job consisted of making sure that profits were found where they were expected and who guarded against fraud.

While that is still an important part of the role, most CFOs have an expanded role in the company’s overall strategic plan. Where the COO might be responsible for overseeing factory capacity and maintaining employment levels, a chief financial officer is a person that will make decisions regarding the need of the company to expand, contract, or invest in new avenues.

Once a very passive role, today’s CFO is expected to understand more than just their company’s bottom line. They must also have a grasp of the local, regional, national, and global financial forces that might impact the profits of the company.

The Changing View from the CFO Desk

Once the best-qualified people in the CFO role were detailed-oriented and deeply embedded in the minutiae of the company’s finances.

Today, that has changed somewhat. Chief financial officer is expected to have a solid grasp on the finances, but should also be able to see the “big picture”. This means that he or she needs to be able to anticipate changes that might affect the company to give timely advice to the CEO and the Board of Directors.

Once locked in a backroom reviewing financial reports, the CFO of the 21st Century is someone that needs to be an intimate part of stockholder education. This means that they need to have a dynamic personality and the ability to speak to large groups, as well as handle individual encounters.

The Profits Start in this Office

The CFO is frequently the person who will project future profits, maintain the current profitability levels, and will report on past profits and losses. She or he will also guide the company’s investment strategies for cash on hand and negotiate monies that need to be borrowed.

An important role of the CFO is to advise on mergers, acquisitions, sales, and restructures. Through an ability to guide these events to fruition, the CFO is able to grow a company healthfully, safely, and profitably.

Using their global view, they are able to leverage international events to the company’s bottom line. Simultaneously they are still working with a team of accountants and bookkeepers to be able to provide detailed reports of profitability for the Executive Committee, Board of Directors, stockholders, and governmental authorities.

About the Author

Rene Blum is used to be the CFO of the Russian division of a large multi-national corporation. Over the past 25 years, he has worked his way to his present position through an acute understanding of the internal and external dynamics that can affect his company. He is Risk Management Specialist and has led his company through a restructure that saw the divestment of minor shareholders. Comments are welcomed. If you have specific questions, please email Rene at info@reneblum.com