By Jack Perkins, founder atCFO Hub, which provides on-demand CFO, controller, accounting and HR services.
The chief financial officer is a critical executive at any company, no matter the size, fromstartup to enterprise. The CFO manages, controls and analyzes the business's financial activities. They are ultimately responsible for ensuring that the organization isfinancially sound and that its leadership is makinggood decisions for the future based on accurate financial information and guidance.
CEOs and other decision-makers need to understand the significance of the CFO's role and the steps required to find the right professional to fill this position. Knowing the fundamental qualities that make an exemplary CFO will help those responsible for hiring one identify capable experts who can ensure continued profitability and measured, mindful growth.
The Vital Role of the CFO in an Organization
A great CFO is a force multiplier for any business, enabling the company to maximize its financial performance while minimizing risks and making prudent financial decisions with an eye toward continued success. And the CFO's role is more important than ever in today's business environment. The global economy is increasingly complex, and businesses need to make judicious financial decisions in order to survive and thrive.
Working closely with the CEO and other senior executives, as well as the company's stakeholders, the CFO is tasked with setting financial goals, allocating resources and managing risks associated with the company's financial strategy. This means knowing the company's financials down to the last detail. It's the CFO's responsibility to oversee the organization's accounting, budgeting and forecasting processes. A good CFO will also build rapport across all levels of the company, collaborating with other departments to ensure the organization is running in a financially sound manner. By effectively anticipating and responding to the organization's financial needs, the CFO helps ensure the organization's long-term success and sustainability.
Essential Qualities and Aptitudes of a Capable CFO
An effective CFO should possess a broad range of qualities, including strong analytical skills, technical financial expertise, superior communication skills and the capacity to think strategically. CFOs must simultaneously develop and maintain relationships with internal and external stakeholders, such as investors and bank officials.
CFOs should, furthermore, possess robust leadership and management abilities. They must effectively oversee a team of financial professionals, including accountants and bookkeepers, while motivating and inspiring them to reach their goals.
Good CFOs must be adept at problem-solving, think critically and develop creative solutions to financial issues. They must also be highly organized and manage multiple tasks simultaneously. In a volatile, rapidly evolving economy, CFOs must, ultimately, be capable of making sound decisions in high-pressure situations.
The Perils of an Ineffective CFO
An ineffective CFO is unable to keep pace with the ebb and flow of their organization's finances. They may lack the proficiency and understanding they need to make sound financial decisions or proffer cogent advice. As a result, their company may fail to identify or address potential fiscal problems before they result in lost productivity, lost opportunities or economic difficulties.
An ineffective CFO cannot adequately analyze the company's financial position. Without a thorough understanding of the company's economic realities, making informed and strategic decisions becomes impossible.
If the CFO cannot accurately assess the company's current financial health, then any investments or financial choices the organization makes will be based on incomplete or inaccurate information. This often leads to inferior acquisitions and other costly decisions that can have disastrous consequences for the company's bottom line.
Finding the Right CFO: The Difference Between Success and Failure
The right CFO can be an invaluable asset to a company, key to achieving its strategic goals and instrumental in bolstering its financial performance. Conversely, an ineffective CFO can be a grave liability, stifling the company's growth in the best circ*mstances and contributing to its failure in the worst.
CEOs and other decision-makers who are tasked with recruiting this kind of highly specialized professional would do well to carefully consider the significance and power of the CFO position and make their best efforts to attract and retain someone with the right mix of skills and attributes.
