The CFO’s roles in business finance directly impact the control and economic health of small and medium enterprises (SMEs). The CFO is the key figure who connects administration, accounting, and treasury with the business objectives and strategic plans. Having a CFO can be expensive for an organization. Therefore, some smart companies prefer to hire an effective virtual CFO Service.
However, despite its importance, the profile of the CFO is not always taken into account in small businesses.
What is a CFO?
The meaning of CFO is “Chief Financial Officer”. A CFO is responsible for the development of the company’s economic and financial planning. Said planning implies carrying out the projection, order, and control of investments, financing, and risks. This helps the company maximize profits and avoid losses.
Why is the CFO important in finance?
It is pertinent to value the role of the CFO in the SME environment. We must clarify that the focus is usually on the most administrative routine tasks associated with the accounting department and the administration.
However, the presence of the CFO in the finances of the company is essential. This presence helps the company to benefit from the strategic opportunities. Such opportunities are related to economic optimization and readjustment with new financing options more suitable for the business.
Differences between CFO, COO, CEO, and CTO
The meaning of CFO is part of a concept of business organization that has been put into practice in the Anglo-Saxon culture, and that has been expanding throughout the world. Thus, along with the CFO or financial director, other positions, including COO, CEO, and CTO, are also recognized.
The COO (Chief Operating Officer) is in charge of supervising and managing the creation and distribution systems of the company’s products.
The CEO (Chief Executive Officer) is the head of all the company’s management matters and its administrative direction. The executive officer sets the company’s objectives and has the last word in everything necessary for them to be achieved.
The CTO (Chief Technology Officer) is the technical person responsible for developing and correcting the information systems operations from the execution perspective.
The profiles of CFO, COO, CEO, and CTO are associated with one another. These provide the company with comprehensive strategic management from different areas (finance, operations, management, and technology). In this context, the CFO interacts with the COO, the CEO, and the CTO to advise on economic decision-making. Therefore, each area manager has the certainty of the viability of the projects to be implemented on time.
Functions of the CFO in finance
The key functions of the CFO in finance are many and complex. If you have an SME and need to outsource, you can hire local bookkeeping services. You will need to ensure that the company offers bookkeeping services for small business entities with valuable resources, including the best software.
The functions of the CFO correspond, as we advanced before, with the company’s financial planning and economic matters. Look at some of the functions of the CFO in the following:
- Monitors the economic health of the business;
- Analyzes the company’s current financial situation, together with the current market situation. Based on this information, the CFO determines the starting point that the company has to achieve its business goals and objectives;
- Develops the policies of the company’s economic strategies;
- Evaluates the company’s financial ratios and creating indicators to monitor economic performance;
- Finds the best investment opportunities, projecting returns and managing risks;
- Establishes strategies that improve the use of resources;
- Provides supports to other managers in their decision-making that involves the economy of the company in one way or another;
- Analyzes the company’s costs while finding ways way to cut them;
- Reports the company’s financial balance to the CEO; and
- Presents the income statements to investors and shareholders.
The CFO can and should filter, analyze and consider all the economic information to assist in the company’s financial affairs. Seeking new alternatives is the strategic part of the CFO, maximizing the value of the company and grabbing the investors’ attention.
It is best for SME companies to have the best CF