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    Expectations Of The Modern CFO

    Expectations of the Modern CFO

    The role of the modern CFO has grown far beyond the standard of yore. Executive teams are demanding more from their finance unit, in the interest of creating beneficial relationships with management teams, shareholders, and regulators. 

    No longer are executives satisfied with the ‘number crunching’ finance officer. The role has been redefined, requiring a CFO to wear many hats: not only are they a business partner and an astute financial advisor, but also a visionary, adept communicator, and an expert in creating value for the company. 

    Specifically, finance officers need to:

    1. Guarantee accurate and responsible reporting 
    2. Effectively communicate with internal and external stakeholders 
    3. Manage risk and compliance 
    4. Advise the management team on strategic and operational issues 
    5. Ensure strategic use of company capital 

    In addition to the above, a CFO must effectively execute the company’s strategic plan and work towards achieving the company’s goals. It can be difficult to find a CFO that will fulfil all these expectations. In light of the growing responsibility of the CFO, there is high demand for premiere outsourced accounting. That’s where we come in. 

    The Role and Responsibilities of the Modern CFO

    The Contemporary CFO’s Role and Responsibilities: A Function in Transition

    The function of the CFO has significantly changed during the past few decades. The CEOs today take for granted the historical responsibilities of the finance department, such as keeping books and records, financial reporting, and adhering to the law. Future CFOs will need to be able to use financial data to inform operational strategy and decision-making.

    What Performs a CFO?

    In addition to overseeing the organization’s financial operations and being in charge of the finance and accounting staff who carry out operational duties, the CFO also acts as a strategic advisor to the other members CEO of the C-suite.

    The CFO’s duties include achieving revenue and earnings targets and maintaining a steady cash flow. Additionally, finance directors guide department heads across the entire organization, helping them to maximize revenue if they have a revenue-generating role and reduce expenses without compromising client or employee happiness or the business’s brand name.

    Responsibility of the CFO

    Liquidity

    The ability of the company to settle its short-term liabilities with liquid funds is termed liquidity. What the company owes compared to what it owns is typically expressed as a ratio or percentage representing liquidity. FOs are concerned with making sure that customer payments are made in whole and on schedule.

    Return on investment (ROI) 

    A CFO’s strategic focus includes ensuring their firms get a good investment return. ROI is a metric for determining the likelihood of a return on investment and the specific amount of that return. It considers the gain or loss of an investment as a proportion of the cost as a ratio.

    While net present value, for example, is not taken into consideration by ROI, a pretty essential KPI, CFOs utilize additional information to determine whether a project would produce a strong enough ROI to be worthwhile.

    Forecasting

    The capacity of CFOs to accurately forecast anticipated future outcomes is an essential aspect of their value to a firm. Crucially, they need to report what is. It comprises financial forecasting and modeling based on internal and external variables that may impact revenue and expenses and the company’s historical performance. The CFO’s responsibility is to interpret the numerous departmental predictions to produce profit projections for the CEO and shareholders.

    While external data inputs may include opportunity cost for capital, changes in market demand, emerging competitors, and technological advancements, internal considerations may consist of sales patterns, labor, and HR-related costs, the price of raw materials, and more.

    The input of board members, lenders, and other stakeholders, as well as information from analyst firms, business and general media, and government statistics, may be used by CFOs to monitor the external environment.

    Reporting 

    Examples of financial reports are profit and loss statements, balance sheets, and cash flow. It also aids in understanding the company’s financial health of both internal leaders and external stakeholders. The CFO must certify that these statements are complete and accurate, following generally accepted accounting principles (GAAP).

    Conclusion 

    Many businesses produce these statements even though private companies are only required to file financial reports with the SEC if they have at least $10 million in assets and 500 shareholders. It is done so that they will be available in case the business needs a bank loan, venture capital funding, or equity funding.

    Also Read: How Back-Office Services Help Scale Businesses: Everything You Need To Know

    PikoHANA’s mantra is “innovative, effective solutions that maximize the financial well-being of our clients.” With over 25 years of experience operating in Asia, we are excited to bring our expertise and knowledge to companies looking to improve and maximize their financial performance. We work with you as a business partner in launching comprehensive back-office solutions to create a foundation of financial management. PikoHANA simplifies and automates your back office so you can focus on the more important things, like building customer relationships and scaling your business. 

    If you are interested in our service offerings, including complementary CFO advisory services, contact us today to create a service package tailored to your company’s needs. 

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