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The importance of the Chief Financial Officer (CFO) in the company



The importance of the Chief Financial Officer (CFO) in the company

For 35+ years, we’ve been the on-demand CFO (Chief Financial Officer) for American business owners, and we’re damn-good at what we do, on average we increase businesses revenue by 40.1% ($2.3M) and profits by 954.9% ($1.8M) over 3 years.

The CFO is responsible for overseeing and managing financial reports, investment portfolios, accounting, and all types of financial analysis for the company. In addition, he must supervise the cash management strategies as well as the regulatory area of the enterprise.

He is committed to accurately managing an organization’s cash flow by monitoring balance sheets, profit and loss statements, and the cost and revenue model.

Responsibilities also include the development of an efficient financial strategy. It must clarify all the financial aspects of the organization, fulfilling the objective of minimizing costs and maximizing benefits. It is also in charge of making budgetary decisions and developing the financial planning of the operation.

The CFO Services must be well-versed in the technical aspects of any type of financial decision the business makes. The key elements of financial management are:

· Financial planning

· Financial control

· Financial Decision Making

Management has to ensure that funds are available at the right time to meet the needs of the business. In the short term, financing may be necessary to invest in equipment and stock, pay employees, and finance sales made on credit. In the medium and long term, financing may be necessary to significantly increase the company’s productive capacity or to make acquisitions.

Financial control

Financial control is an extremely important activity to help the company ensure that it is meeting its objectives. It is a method designed to answer the following financial questions that a company may have:

· Are assets being used effectively?

· Are company assets protected?

· Is company management acting in the best interests of shareholders and in accordance with business rules?

Tools for financial control

· Cash controls: system for managing amounts in cash.

· Bank controls method to ensure that the bank account cannot be misused.

· Budgetary and accounting control: they provide sufficient information or manage the activities of the organization.

· Purchase and authorization control: designed to ensure that different people participate at each stage.

· Control management: additional controls carried out by the administration.

· Physical controls: maintenance and security of business property and guidance on the use, by staff, of items owned by the organization.

Financial Decision Making

The fundamental aspects of financial decision-making are related to investments, financing dividends, and asset management. For example, investments must be financed in some way, however, there are a variety of financing alternatives to consider. For example, it is possible to obtain financing through the sale of new shares, bank loans, or taking credit from one of the suppliers.

What are the functions of a financial director?

It depends on the type of organization, whether it is public or private since one is required in both, but in general, the functions are as follows:

•          Ensure the correct and timely use of company resources.

•          Generate the annual spending budget.

•          Project revenue estimates with historical information and balances periodically.

•          Prepare the income statement of the company.

•          Detect investment opportunities for the company in the stock market, the market, the public sector, and industry.

•          Warn adverse economic situations of inflation that could affect the price of products.

•          Implement financial control mechanisms.

•          Supervise internal financial audit processes in the areas of the company.

•          Keep financial commitments with suppliers and the financial institution up to date