Chief Financial Officer (CFO)
Definition: The Chief Financial Officer is the individual within the organization responsible for managing the financial risks and reporting function of the organization. The CFO will be responsible for the traditional role of financial gatekeeper as well as being involved in the shaping of strategy and operations for the organization from the financial perspective.
Financial Reporting: The CFO will be responsible for preparation and presentation of all financial reports used within the organization. This would include Profit and Loss Statements, Balance Sheet, Cash Flow Statements, Accounts Receivable Statements Accounts Payable Statements or other reports needed to manage and lead the organization. Depending on the size of the organization direct reports would include Vice President Finance, Controller, or other team members to support the financial functions. Through the CFO the Financial Department should be a resource to other departments providing guidance on the development of metrics or special reports to gauge the effectiveness of expenditures and activities.
Cost Accounting: The CFO and the financial team will provide the organization with structure to determine accurate costs for products and services. The CFO will come along side other departments to help guide product and service development to assure profitability to the organizational activities today and with future projects.
Risk Assessment: A risk to an organization is any uncertainty affiliated with a particular circumstance that could cause damage to the organization. The CFO and their team should evaluate the vulnerability of the organization to financial risks. This will include such things as establishment of financial practices for the prevention of fraud, what affect the changing economic condition will have, strict attention to company cash flow and more.
Economic Strategy and Forecasting: The CFO and their team are an integral part of the company’s financial future. They must be able to identify and report which areas of the company are most efficient and how to best capitalize on this information. For example the CFO should provide information on which services or products are the most profitable to the organization and share this ongoing information with others in the company to guide the organization to improve economic success. Economic Forecasting is a key area of the responsibilities in guiding the future success of the organization.
Changing Role of the CFO: The traditional role of the financial department and the CFO in particular is reactive. This individual and their team provide the traditional historical financial reports. Unfortunately this role provides too little guidance for future activities and underutilizes what could be valuable asset to the organization to avoid problems and to accelerate the success of the organization. A more proactive and departmentally interactive role is required and is what will be provided through a Summit Outsourced Executive CFO.