What Does a Chief Financial Officer (CFO) Do?

When you hear the term chief financial officer (CFO), the first thing you may probably think about is corporate finances. But, there’s more to a CFO’s job than just dollars and cents. If you asked any company’s CFO about what they do, you would probably be in for a three-hour conversation. But, the core duties can be summarized in just a few paragraphs.

Key Takeaways

• A chief financial officer is responsible for a company’s past and present financial situation.
• The CFO is also an integral part of a company’s management and financial future.
• This professional has multiple duties, from financial reportage to deciding where and when to invest company funds. 
• A CFO oversees the capital structure of the company, determining the best mix of debt, equity, and internal financing.
• Addressing the issues surrounding capital structure is one of the most important duties of a CFO.

Controllership Duties

Controllership duties make up the backward-looking part of a CFO’s job. They hold the CFO responsible for presenting and reporting accurate and timely historical financial information of the company. Undertaking controllership duties include (but aren’t limited to):

• Internal oversight
• Preparing financial statements
• Budgeting and forecasting
• Supervising the accounting department
• Coordinating audits

All stakeholders in the company, including shareholders, analysts, creditors, employees, and other members of management, rely on the accuracy and timeliness of this information. The information reported by the CFO must be accurate because many decisions are based on these details.

Treasury Duties

The CFO is also responsible for the company’s present financial condition, so they must be able to handle the company’s cash flow and decide how to invest the company’s money. This means they have to consider the liquidity and risks associated with the decisions they make. This requires a deep understanding of risk assessment, financial management, and analytical skills.

They also oversee the capital structure of the company. As such, they determine the best mix of debt, equity, and internal financing. Addressing the issues surrounding a company’s capital structure is one of the most important duties of a CFO.

Important

Leadership and communication skills are two very important qualities that a CFO must possess. That’s because they have to manage and supervise staff and make information available to key stakeholders in a clear and timely manner.

Economic Strategy and Forecasting

Not only is a CFO responsible for a company’s past and present financial situation, but they are also a key player in a company’s future growth potential. A CFO must be able to identify and report what areas of a company are most efficient and how the company can capitalize on this information.

This aspect of a CFO’s duties also includes economic forecasting and modeling. In other words, the CFO must try to predict the best way to ensure the company’s success in the future given multiple scenarios.

For example, the CFO of an auto manufacturer must be able to pinpoint which models make the most money for the company and how this information be used to help improve the company’s financial position in the market in the future.

How Much Does a Chief Financial Officer (CFO) Earn?

A CFO is part of a company’s C-suite. This term is used to describe a corporation’s top senior executives, including the chief executive officer (CEO), chief operating officer (COO), chief information officer (CIO), and CFO.

Given their job duties and the experience they bring to the table, it should come as no surprise that CFOs often earn top dollar. The Bureau of Labor Statistics (BLS) groups all executive positions in the same category. The agency reported an annual median salary of $103,840 for 2023. Keep in mind that this average doesn’t include any incentives like stock options and bonuses, so their salaries can get even higher as shown in the table below for the highest-paid CFOs in 2024.

Who Does the CFO Report to?

A CFO is the highest-ranking member of a company’s finance team. While they have different people who report to them, the CFO reports to the chief executive officer (CEO) and the company’s board of directors.

How Much Power Does a CFO Have?

A company’s CFO is a member of its C-suite. This means they are a high-ranking member of its executive branch. As such, they hold a considerable amount of power when it comes to the company’s finances. As such, they are the financial manager, making important financial and investment decisions. They also oversee the accounting department, file financial statements, budget, and forecast among other things.

Who Reports to a Company’s CFO?

A company’s CFO is responsible for its finances and supervise many different people. Among those who report to this member of the executive branch include controllers, accountants, tax managers, risk officers, treasurers, and finance directors. Keep in mind that this is a general list and larger companies may have more roles under the CFO.

The Bottom Line

The CFO’s job is a very complex one. We have only scratched the surface of the many things this corporate executive is responsible for. One thing is certain: The way a great CFO differs from a good CFO is in the way they are able to project the long-term financial picture of the company and by how the company thrives based on metrics such as multiple analyses.