7 Essential Functions of the Financial Director in a CompanyIf you are a manager or owner of a company , in this article you will discover the advantages it has to have a CFO in it.
If you are a financial director , I hope it helps you to have a global vision of the work to be done in your day to day and to value the great work you do .
The main objective of your financial director is to know the economic-financial status of your company, establishing periodic controls to analyze its evolution and you, as administrator or owner, can make the best decision at the right time.
As you have already read many times, it is essential that your accounting is the true image of your company , that is, that your balance and your income statement are adjusted to the reality of your business.
If there is no quality in the accounting information, it will not do you any good to invest time and money in analyzing your financial statements. To do this, you must have the criteria of a good professional , such as your financial director.
1.- What is a financial director in a companyThe CFO, CFO or Chief Financial Officer (CFO) is the manager in charge of the financial management of your company , that is, manages and manages its resources.
It is a strategic job within your company. The financial director works with you, so that you have the necessary and useful information at all times.
It is usual for the administrator himself to perform the tasks of general manager and financial director , because he understands that his functions are practically the same, but this is not the case.
You as the CEO must have the strategic vision , that is, permanently analyze how to obtain the objectives you have set for your company.
Another task is the administration and optimization of resources (financial) and how to get them , this is the responsibility of your financial director.
It is important that you dedicate yourself to what is best given to you, your main activity, which is to produce and sell your service or product. And all the secondary activities, delégalas.
2.- What is the profile of a financial director?A CFO or CFO is a fairly broad profile . Although there is always a minimum of accounting knowledge, financial and tools that have to count, to be able to take a strategic department of your company, your skills to stand out are:
- University degree or higher degree in accounting and finance.
- Advisable to have a master's degree specialized in financial management or financial controller .
- Skill in new technologies .
Knowledge of strategic management tools and digital communication .
- Languages. We are in a global environment. We move in a market without borders in which languages are indispensable.
2.1.- Essential skills of a financial directorSo far, you have the necessary skills that your CFO must meet. They are a minimum requirement of departure , since without knowledge it can not develop its functions.
But, for your work to be brilliant within your company, you have to pay special attention to your attitudes . These are an indispensable requirement.
Your strategic plan has to establish a system of cooperation and communication between all the departments of your company, so that all of them are committed to the mission, vision and values of the company , and as a result, all share the same objective.
Also, think that the financial department is related to the rest of the departments, without any cooperation or communication action, since everyone needs financial resources (money) , and who has it? The financial department
The financial director's attitudes mark the difference between the success or failure of your objectives, because it is a link between all the departments of the company.You could highlight as essential skills of a financial director the following:
- Lead: effectively.
- Motivate: the other departments to be proactive, to propose improvements, to create relationships of trust and transparency and that decision-making is based on productivity.
- Communicate: know how to transmit, guide, delegate, recognize and care for all employees of the company.
- Strategic vision: perspective of the future, with several foreseen scenarios, towards a common and global objective.
- Tolerance to pressure / risk: you will have to play the role realistic and say "no" many times.
- Negotiation capacity: both in internal and external relationships.
- Ability to synthesize: filter and summarize a lot of information.
- Be flexible: tolerance for change.
- Be ethical: transparency and lead by example.
3.- 7 Essential functions of the CFO - CFOThe 7 essential functions that your financial director must perform in your company on a regular basis are the following:
- Economic-financial analysis: Consists of performing a vertical, horizontal analysis and its basic ratios to control the evolution of your company.
- Financial plan: The financial needs of the company must be covered at all times by the best possible conditions in terms of term and price. And this will only be achieved with the preparation of your financial plan and your contingency plan , the search for financing must be included in these plans.
- Budget: It is the projection of your sales for the next 3 or 5 years. Essential document for the achievement of your objectives. Depending on your billing volume, you should perform weekly or monthly checks.
- Treasury Budget: It is a projection of your liquidity needs , taking into account what your payment obligations will be with your suppliers and creditors and your collection rights with your customers and debtors.
Having financial control of your company guarantees the growth of its value.
- Investment budget: It is very linked to your strategic plan , collecting your future needs in a calendar, as well as its viability, profitability and way of financing it.
- Support strategic plan : The finance director helps determine the strategic policies of your company, because they are based on financial operations. For this, it generates indicators that show the evolution of your company.
- Advice in the process of decision making: The financial director transmits all the information directly to the CEO or executive director, that is, to you, so that you can evaluate the different alternatives that you have before you, and your decision is the most suitable.
With this, you ensure a better performance and optimization of resources , and in the long run, a greater value for your company .
4.-The tools of the financial directorThe main work tools used by the CFO are the following:
- Accounting analysis: From the accounting data, mainly the balance and the income statement of your company.
- Management control: Deep analysis on cost accounting of your process of generating value of your product or service.
- Strategic plan: Once you have designed it, it is the map that your company must follow to achieve the objectives that you have set.
- Integral scorecard: it is a control scheme, by way of summary, collecting the most significant indexes and parameters of your activity and its results.
5. ConclusionsThe CFO has become an essential figure for any company. Always work with you in the direction. From your work you will obtain the necessary conclusions to make your decisions. Always aiming to increase the value of your company .
The current environment is very unstable and changing , therefore, the challenges that you will encounter are increasingly risky. You must be prepared and face, both your threats and your opportunities with financial strategies that make you emerge victorious.
A professional in finance will be able to design action plans that help him to make decisions that solve problems in the financial field, knowing how to manage resources, analyze financial markets and propose correct economic-financial strategies .
Finally, just tell you that I hope you have decided to hire a financial director (jejejeje) , because it is an investment that you will profitably profit both in increase of benefit, and in reducing concerns.
I would love to read your opinion on this topic, or if you want me to add more information about any point.