Roles and Responsibilities of a CFO

When does a company need a CFO?

3 key triggers, that may exist simultaneously:

• Size – when a company reaches £30-£40m turnover it will typically have reached a level of complexity that demands the attention of a CFO
• Funding – a CFO may be needed to manage and give credibility to the process of bringing in new funds especially where Private Equity is involved, and to ensure there is confidence in the post-funding period.
• Growth - where a static business is looking to challenge the status quo and to supercharge its growth plans through the development and execution of a dynamic strategic plan.

Why has the role increased in importance and scope in recent years?

• Globalisation - in order to adapt to the increasingly complex and fast-changing global business environment, companies have needed to place the CFO and Finance at the centre so they have the right grasp on the financial and regulatory implications.
• Data - operational data has become more plentiful and more readily available to companies over time, so it has fallen to the CFO to interpret it and filter it to inform good tactical and strategic decision making.
• Control - big corporate scandals that led to the failure of companies such as Enron and Worldcom in the early part of the new millennium led to increased regulatory scrutiny in the US in the form of the Sarbanes-Oxley Act

What are the key aspects to the role beyond management of the company’s finances?

In addition to management of the Finance department, there are 7 key areas the CFO will need to organise:

• Coordinating the Board/Senior Management Team: will be central to setting the drum-beat and ensuring the right data and materials are available to support decision making;
• Assessing Performance: continuous assessment of operational performance vs Key Performance Indicators, and periodic reforecasting;
• Long Term Planning: work with the Chief Executive to reset the overarching business goals and strategies, have opinions on which strategies will work best, within an understanding of the macro-economic environment;
• Goal Setting: translation of long term plan into departmental (and individual) objectives;
• Funding: ensuring there is sufficient working capital to fund operational cash flows at all times; sufficient line of sight to any cash pinch points, and present options to add funds if necessary; manage relationships with lenders and equity investors;
• Shareholder and Investor Management: maintenance of an effective narrative on the business to ensure ongoing trusting relationship;
• Management of non-Financial Departments: typically the CFO will manage 3-6 departments beyond Finance, most often Information Technology (IT), Administration, HR, Procurement.