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What is the Role of the Chief Financial Officer of a Company?
“It is not the strongest of the species that survives, nor the most intelligent…it is the one that is the most adaptable to change.”
Charles Darwin’s law of survival could not be more fitting in our current business climate. Increasing data analysis, financial challenges, government regulation and global competition has made the business ecosystem much more difficult to navigate. One of the main pillars in these turbulent waters is the Chief Financial Officer (CFO) of the company.
The responsibilities of the Chief Financial Officer can be broken down into four main categories. They are financial reporting and risk management; operational efficiency; strategy development and future innovation.
Financial Reporting and Risk Management
CFOs are charged with the responsibility of protecting the vital assets of the company by properly assessing and managing all financial risks. They oversee the capital structure of the company in order to determine the optimum mix of debt, equity and internal financing required to meet the company’s objectives.
Since the Financial Statements developed by the financial team are used to make critical business decisions, the Chief Financial Officer must ensure the organization’s financial reports are accurate and timely. Reports must be in compliance with all financial laws and regulations of their industry and properly reflect the firm’s financial status.
Chief Financial Officers must keep a keen eye on the efficiency of all operations in order to maximize the return on investment of the company’s assets. This is done through financial planning and analysis; budgeting, growing revenue, reducing costs and minimizing taxes. Metrics like Key Performance Indicators (KPI) must be developed, instituted and monitored on an ongoing basis to make sure all operations are profitable.
A thorough knowledge of the organization’s business model and an understanding of how its systems and processes drive customer value in a measurable way are imperative.
The CFO is a vital part of the long-term strategy development team and is given a substantial voice in directing the company. He or she is relied on for leadership and making sure the organization’s financial and business goals are in alignment.
In the past, the Chief Financial Officer has not been required to play a significant role in technological innovation. However, the complexity of doing business in a global economy has forced all leaders to keep up with new technologies as a matter of standard operating procedure.
Managing the dynamics of constant change requires a person who can build on past successes, embrace the challenges of the present and imagine the opportunities inherit in the future. Pacific Crest Group wrote “Hiring a CFO: What You Need to Know” to help you determine whether your Chief Financial Officer is really performing at the level you need. Failure to be adaptable can rapidly lead to extinction.
How We Can Help You
Pacific Crest Group (PCG) provides professional services that keep your business focused on your critical objectives. We provide strategic Accounting and Human Resource (HR) services created specifically to help you meet your goals. Through exemplary customer service, clearly defined policies and procedures as well as a forward-looking perspective, we provide the outsourced solutions your business needs to grow. A PCG professional is happy to meet with you to discuss solutions for your unique requirements designed to maximize all of your business opportunities.
This newsletter is intended to provide generalized information that is appropriate in certain situations. It is not intended or written to be used, and it cannot be used by the recipient, for the purpose of avoiding federal tax penalties that may be imposed on any taxpayer. The contents of this newsletter should not be acted upon without specific professional guidance. Please call us if you have questions.
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