Chief Financial Officer (CFO)

economic-dictionary

A financial director is the professional responsible for using the monetary resources of the organization in the best possible way, detecting opportunities that allow generating investment and savings for the company.

The financial area is a support in any organization and in it lie the investment, savings, indebtedness and budgeting decisions of the other areas. The person in charge must have, in some way, notions about the functioning of the entire organization in its expenses, purchases, hiring and periods of greater activity. Which is essential to schedule the budget execution of the resources available for the period.

The person who takes care of it is what we call the CFO.

What are the functions of a CFO?

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

  • Ensure the correct and timely use of the company's resources.
  • Generate the annual spending budget.
  • Project income estimates with historical information and make regular balances.
  • Prepare the income statement of the company.
  • Detect investment opportunities for the company in the stock market, the market, the public sector and the 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 fiscal institution up to date.

The financial director must be in permanent communication with the other functional areas; as Production, Commercial area, Human Resources, Legal and of course, the General Management, to report what is the situation of the company in terms of income and expenses and thus adjust to the resources available for the investments that each area needs, for which plays an advisory role in all departments.

What knowledge should a CFO have?

The profile of a CFO is someone who is passionate about finances and, to some extent, cost accounting, because they are the tools that they will use the most in their professional work. In addition, you must have specific knowledge in subjects such as financial mathematics, to read and interpret results, as well as to make your own calculations; in current and corporate finance to interpret current situation results.

It is also relevant that for projection exercises it handles the tools for calculating the net present value (NPV), to elaborate flows to future periods and additionally, the calculation of the internal rate of return (IRR), for the evaluation of investment projects.

Generally, the professionals who occupy these positions are accountants or business administrators with postgraduate degrees in finance, since their initial training does not have the same financial-accounting intensity as that of an accountant. Therefore, they must specialize through diplomas and postgraduate degrees.

In short, a financial director is responsible for managing the monetary resources of the organization, making decisions that are economically argued for the well-being of the organization.

Tags:  accounting bag derivatives 

Interesting Articles

add