CFO - In­vestors’ True In­sider!

Dalal Street Investment Journal - - COVER STORY -

The Chief Fi­nan­cial Of­fi­cer's (CFO'S) role in a cor­po­rate set up has been chang­ing over the last cou­ple of decades. The CFO, from be­ing merely a fi­nan­cial wizard, is now seen more as a “Strat­egy” per­son and a busi­ness leader who has con­trol over all the ma­jor is­sues (fi­nan­cial and non­fi­nan­cial) in the com­pany.

The CFOS have hands-on ap­proach on ma­jor­ity of the deal­ings of the com­pany and are the ones who have com­plete in­for­ma­tion on all as­pects of the busi­ness. Today’s CFO can be seen as a Fi­nan­cial Strate­gist & Busi­ness Ad­vi­sor to the CEO. It is no longer enough for CFOS to be re­port­ing numbers and man­ag­ing fi­nan­cial func­tion.

Today’s CFO is seen ap­ply­ing crit­i­cal think­ing skills along with fi­nan­cial acu­men to the long-term goals of the or­gan­i­sa­tion. The CFO is also a team player who takes the own­er­ship of the fi­nan­cial re­sults of the or­gan­i­sa­tion. The CFO’S role in­volves tak­ing tough calls that oth­ers in the or­gan­i­sa­tion do not or can­not take.

As a team leader re­spon­si­ble for build­ing a team of ex­perts in busi­ness and fi­nance, a CFO also needs to be good peo­ple man­ager. When it comes to in­ter­act­ing with ex­ter­nal par­ties, the CFO needs to have diplo­matic skills. A good CFO will nor­mally in­spire the peo­ple from out­side of the com­pany and gen­er­ate con­fi­dence amongst the stake­hold­ers on the com­pany’s abil­ity to per­form. CFO is, on most oc­ca­sions, the se­nior per­son in the com­pany who will vouch for fi­nan­cial vi­a­bil­ity of the com­pany. Thus, for cus­tomers, ven­dors, share­hold­ers and the bankers, CFO is the face of the com­pany’s sus­tain­abil­ity.

The role of a CFO is in­creas­ingly be­com­ing flex­i­ble nowa­days and a CFO is of­ten seen multi-task­ing. In­creas­ingly, the CFO is be­com­ing a multi-func­tional se­nior man­age­ment of­fi­cer with mastery in fi­nance Few years back, a CFO was seen as a fore­caster of all the fi­nan­cial re­quire­ments of the or­gan­i­sa­tion and one who had a tab on all up­com­ing and con­tin­gent li­a­bil­i­ties. These days the role of a CFO has be­come par­al­lel to that of the CEO. The role played by CFO com­ple­ments that of the CEO.

The today’s CFO is un­der a lot of pres­sure as he is re­quired to man­age lot of trans­for­ma­tional chal­lenges. In the cur­rent en­vi­ron­ment, where the com­pli­ance rules are get­ting stricter and in­ter­nal con­trol needs to be main­tained at high levels, the work is cut out for the CFOS. The CFO is also re­spon­si­ble for build­ing a team of fi­nan­cial ex­perts with ad­vanced an­a­lyt­i­cal and com­mu­ni­ca­tions skills who can col­lab­o­rate and help other de­part­ments use data to make sound strate­gic de­ci­sions in a volatile busi­ness en­vi­ron­ment. No won­der, for­ward look­ing anal­y­sis has be­come a norm rather than an ex­cep­tion for a CFO.

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