This is my last report before the elections. Putting aside never-ending polls and forecast, I now would like to share with you an important observation of mine.
Difficult times await the CFOs, aka Chief Financial Officers. On the other hand, General Managers, who are entrusted with the task of managing the strategies between the cost price and the actual cost, can trust no one but the CFO in handling any other problem or situation.
The CFOs of today are not only responsible for implementing a good accounting and finance management system, but they are also expected to monitor and track identified as well as potential risks at all times. Sometimes, they can even be given the task of managing human resources and technological infrastructure. But in today’s report, I will rather touch upon the main roles of a CFO.
A CFO has three core responsibilities. First one is the accounting. There is one thing you should know about the accounting: an accountant lives in reverse. In other words, s/he always checks the rear-view mirror. The accounting department of a company calculates tax, estimates the amount of taxable income and regularly remits income tax payments to the government. Therefore, accountants work for the government in a sense. Although they will never be expected to carry the company into the future, they are undisputedly essential to the company.
The second core duty of a CFO is to manage the company’s financial operations as the head of the finance department, which is also called “Treasury” in some companies. CFOs manage payables, loans and revenue processes, banking relationships and prioritize payment strategies. One of their most important features is that they are forward-looking leaders. Their duties also include tracking cash flow, one of the fundamental financial functions of a company. Although companies can outsource their accounting services, they can never outsource their finance since this is matter of trust.
“CFOs must do what they are supposed to do…”
Reporting is the third main duty of a CFO. If you entrust this important task to the accounting department, you won’t be able to provide managers with accurate, reliable and timely data; because, the accounting would already be tackling their own tasks of previous month. Therefore, managers need others to prepare the reports in order to maintain strong risk governance. Fast-growing companies may face a risk of default if they leave the task of reporting only to the accounting department. This risk, however, can be minimized using technology.
The only part I disapprove is the new tasks entrusted to the CFOs, such as human resources and digital transformation management. We will find out whether the efforts for keeping the CFO position alive, whose very existence is threatened by the latest breakthroughs in Artificial Intelligence, will be fruitful?
We will see the CFOs trying to float their companies through the big rough seas by taking strategic actions as CEOs or General Managers will be setting a future course.