A CFO, or chief financial officer, is the financial head of an organization. Usually reporting directly to the CEO, or chief executive officer, a CFO is responsible for keeping an organization financially healthy.
CFOs work in businesses, not-for-profit organizations and even some government entities. They are responsible for the finances, but what all does that entail? A CFO has four “COAR” areas of responsibility:
Cash Flow is perhaps the most important area of a CFOs responsibility. Cash flow means managing the funds coming in and out of an organization on a daily basis to make sure that is has enough money in the bank to operate. A CFO manages cash flow in an active and forward-looking way. Considering inventory, and accounts receivable and also sales and production forecasts, a CFO can show you how much money you made yesterday (not last month, but yesterday) and predict how much money you’re going to make tomorrow and into the future. In managing cash flow, a CFO works with the sales team and the production team and also the bank and funding sources.
Operations is another area of CFO responsibility. Your CFO will also be very involved in all aspects of production and operations. By keeping his finger on the pulse of the company, a CFO reports on key performance indicators and critical operational data. Flash reports can include information on job costing, work in process or personnel or equipment utilization. Working in the operations area, a CFO works extensively with the production team.
The Accounting function also falls in the CFO’s jurisdiction. A CFO manages the internal accounting department and ensures that all reporting is done in an accurate and timely manner. He also ensures that internal systems and processes are followed appropriately and that transactions are processed efficiently. In managing the organization’s accounting function, a CFO works with the bookkeeper, the controller and the organization’s outside CPA.
A CFO also manages Revenue, developing tools to measure current, future and backlog revenue. Revenue tools can measure customer profitability and pricing models and can be used to test revenue generation strategies. A CFO works with the sales team to drive revenue.
In overseeing these four “COAR” areas of responsibility, a CFO manages an organization’s finances to ensure they have the needed cash flow to manage and grow the business from the inside-out.
Contact our Ohio CFO services team
Are you running your business without the assistance of a CFO? Do you feel that one of your four COAR areas is suffering? Contact Rea & Associates. Our Ohio outsourced CFO services team can help you to get your COAR is shape. We’ll analyze your COAR and give you help improving it, in whatever way works for you. Count one of our CFOs as a member of your team, for as much or as little time as you need.