Supply Chain Management refers to handling of the entire production flow of goods and services...
CFO, also known as Chief Financial Officer, oversees the financial operations in an organization. They manage all aspects of financial matters and decision making. CFOs have a very critical role to play in an organization as an organization cannot survive if it doesn’t actively investigate and safeguard its finances. This article will discuss Why the Role of CFO is vital in MIS and Board Reporting?
The role of CFO can be best understood under the following heads:
CFO has to control the cash flow position throughout the company. They are also required to understand the sources and uses of cash and maintain the integrity of funds, securities, etc. A modern day CFO also has the authority to establish accounting policies and procedures for cash collections and various other financial obligations. It is the most essential role of a Chief Financial Officer.
A CFO of a company has to understand the liabilities of the company as a company has a number of legal liabilities therefore, the CFO has to watch out for the liabilities.
The CFO maintains lines of communication with financial analysts and shareholders. They administer banking arrangements and maintain adequate sources of capital.
As a CFO, one is required to approve all agreements concerning financial obligations and actions that require a commitment of financial resources.
This is another essential role of CFO to oversee the budget process and compare the company’s actual performance with estimates.
In an organizational structure, a CFO reports to the CEO and gives great input in the investments of the firm, revenue structure, and financial management. They provide their contribution to the overall success by working with other senior executives. When the marketing team brings about a new campaign, CFOs ensures that it is financially feasible and then allocate funds. A CFO can also assist the CEO with different predictive cost-benefit analysis and funding initiatives. The CFO heads over the financial industry, and they may assume the role of CEO or COO or the president of the company in the future.
The following are the responsibilities of a CFO:
The Management Information System (MIS) focuses on the information related to the organization and also technology systems. CFOs analyses the issues of the business and makes designs and maintains computer applications in order to solve the problems of the organization.
Board reporting is an effort to streamline the process of financial reporting and providing the directors meaningful and timely financial information. It involves the preparation of a complete checklist for senior management defining the key performance indicators (KPI). Hence it is a consolidation and redesigning of financial reports, financial analysis report, investment report, etc. It involves both external and internal reporting through the preparation of detailed MIS reports.
The role of CFO has become much challenging and diverse because of increased regulations on finance function, increased disclosure level, and increased governance and oversight. There are companies that are increasingly looking for CFO who can analyse their company’s data. CFOs got an important role to play in the financial set up of a company therefore, you don’t want to take the risk of not taking its services.
Read our article:Why CFO should move away from numbers?