Published on March 9, 2014
The CFO’s Contemporary Role Prepared by : Samir Derbas Jan 31st ,2014
Chief financial officer (CFO ) • Finance Director, a common title in the UK • The chief financial officer (CFO) is a corporate officer primarily responsible for managing the financial risks of the corporation. This officer is also responsible for financial planning and recordkeeping, as well as financial reporting to higher management. • Most CFOs of large companies have finance qualifications such as an MBA or come from an accounting background.
What does a CFO do? Controllership duties presenting and reporting accurate and timely historical financial information of the company ( History )
What does a CFO do? Treasury duties decide how to invest the company's money, taking into consideration risk and liquidity , oversees the capital structure of the company, determining the best mix of debt, equity and internal financing ( Present )
What does a CFO do? Economic strategy and forecasting identify and report what areas of a company are most efficient and how the company can capitalize on this information; For example, the CFO of an auto manufacturer must be able to pinpoint which models are making the most money for the company and how this information can best be used to improve the company in the future ( Future )
Challenging Business Environment
• "How you allocate your time is going to vary year to year, based on the business challenges that your organization is facing." Bill Douglas, Coca-Cola Enterprises
Changing role of the CFO • Traditionally being viewed as a financial gatekeeper
Changing role of the CFO CEO & CFO working together • CFO has expanded and evolved to a strategic partner and advisor to the CEO, developing strategy, guiding key business initiatives
Changing role of the CFO - Strategy • Developing and defining the overall strategy for the organization • Representing the organization’s progress on strategic goals to external stakeholders
Changing role of the CFO • The CFO remains an objective voice on financial performance but contributes to operational decision-making as well. • CFOs manage or materially support information technology, investor relations, real estate and strategic M&A — and some are involved in commercial activities.
Changing role of the CFO • make collaborative rather than unilateral decisions • big-picture thinker, rather than detailoriented • outspoken rather than reserved • prefer to delegate rather than be hands-on • emphasize what gets done rather than how things are done
Changing role of the CFO • The CFO is a Leader “Management is doing things right; leadership is doing the right things” Peter Drucker • ensuring the integrity of fiscal data and modeling transparency and accountability
Changing role of the CFO • fundamental role in the development and critique of strategic choices…due diligence
Changing role of the CFO • key player in stakeholder education and communication • supports the CEO directly and provides timely advice to the BoD • part of governance as the (CEO) • Develop commercial insight; consider stepping outside finance
Changing role of the CFO • Developing a strong team is important, cultivating the skills of the next generation of financial leaders
CFO role; Risk Management • ―Risk Intelligent CFO – Converting Risk to Opportunity • CFOs are often best placed within the executive group to identify and raise those risks or challenge business assumptions at the Executive or Board table • C-suite ( CEO, COO, CRO..) are often so focused on driving growth, economic stability and shortterm results that the causes of potential failure are too easily overlooked.
CFO role; Risk Management • CFOs need to be aware of the limitations of traditional corporate risk management and play a vital role in creating a risk intelligent organisation. • Executives too often assume that the world or environment remains unchanged and that this year’s strategic risks are simply the same as last years.
• "As CFO, I’m in a unique position within the organization, at the absolute center of the universe. The only other executive besides me that has that same presence at the center is the CEO. ◦ - Bruce Besanko, OfficeMax
10 Characteristics of a Successful CFO 1. Financial Foresight: anticipate financial management issues 2. Excellent Communication Skills: communicate the financial health of the company to all stakeholders 3. Confidence: The ability to make decisions on behalf of the company with confidence and assertiveness 4. Vision and Foresight: in tune with his market, enabling him to create and implement business plans 5. Accounting & Financial Competence
10 Characteristics of a Successful CFO 6. Deep Understanding of Business 7. Integrity and Ethical Standards 8. Perspective on Risk: The willingness to try new things and take calculated risks to grow the business and improve the financial position of the company. 9. Result Oriented Nature: set goals that are specific, measurable, achievable, relevant and traceable is a good trait 10. Leadership skills: emotional intelligence; self awareness, self regulation, motivation, empathy and social skills.
Risk and Control
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