Role and responsibilities of the Chief Financial Officer (CFO) 

The chief financial officer is a high-profile position within public companies, but small and midsize businesses (SMBs) also derive value from retaining a CFO. 

Why? The expanded role and responsibilities of today’s CFOs have yielded exceptional results for rapidly scaling businesses. In addition to overseeing the organization’s financial activities, the chief financial officer is also a key strategic partner, growth catalyst, and digital transformation expert. 

What is a Chief Financial Officer?

A chief financial officer is the top financial professional in an organization. Their primary responsibility is managing and optimizing the company’s overall fiscal performance. 

CFOs are generally expected to:

• Build and manage a high-caliber team
• Analyze and report on revenue, spending, and profitability 
• Control department budgets
• Fulfill all legal, financial, and accounting obligations in a timely, orderly manner
• Manage financial planning and analysis (FP&A)
• Work with external partners for mergers and acquisitions (M&A) and due diligence
• Perform board liaison duties 

As the business landscape evolves, the role of the CFO has also grown more complex. 

Today’s chief financial officers must ensure their financial strategy aligns with key opportunities and mitigates rising threats. Industry expertise, investor management skills, fintech experience, and even supply chain insights are some of the leading attributes among the most successful financial executives.

What does a CFO do?

The CFO plays several roles within a business, though the job looks much different if you’re the financial executive for an SMB compared to a public company. 

First, a CFO oversees company finances, accounting, and related activities. They are responsible for everything from timely tax filings to accurate financial recordkeeping — and supervising all related operational processes behind the scenes.

Second, a CFO fulfills a critical advisory role within the C-suite. The chief executive officer relies heavily on the chief financial officer for strategic insights that shape essential decisions about the direction of the business.

The CFO must not only maintain focus on the company’s financial performance — but also possess the foresight to balance complex global economic and industry factors that are likely to impact the business. A Deloitte survey of more than 600 Central European CFOs indicates the 3 core responsibilities for this position: 

1. Tracking, analyzing, and making informed predictions about global economic measures, such as GDP growth, Consumer Price Index (CPI) inflation, and unemployment rates.
2. Conducting financial risk assessments based on how global economic insights may impact the overall business environment, including industry competitors, supply chains, and partners.
3. Providing an informed outlook on company growth by analyzing and projecting revenue, costs, and debt service. 

CFO responsibilities

The chief financial officer is ultimately responsible for pursuing revenue goals, maintaining healthy cash flow and balance sheets, and advising on revenue and expense strategy across departments. They use the resulting insights to advise the CEO and assist in making well-informed decisions. 

What is a CFO typically responsible for — and why?

Leveraging FP&A to grow the business

The CFO develops and oversees the implementation of a financial plan and company-wide budget. They also must analyze performance outcomes and provide recommendations that empower c-suite peers to make informed decisions for their strategic plans. Managing the teams that produce and analyze key company data is the responsibility of the CFO.

Maintaining strong relationships with key stakeholders

The CFO collaborates with the CEO to cultivate positive working relationships with the board of directors, shareholders, and regulators. In the case of SMBs, this list may include seed investors and venture groups. 

Such work involves representing the company on shareholder and investor calls, during board meetings, and presenting quarterly and annual financial reports in employee town halls. 

Mitigating financial risks

Along with the CEO, the CFO identifies and manages risks to protect the company’s financial stability. One such area of risk includes managing liquidity by ensuring customers pay what they owe on time. Keeping a well-run accounts payable and accounts receivable team can make or break even the most successful company.  

Another area of risk handled by the CFO’s team includes expense management, which walks a delicate line between empowering employees to spend approved budgets and maintaining proper oversight to prevent fraud and misuse. 

Finally, the CFO is a key partner when determining the current or potential return on investment (ROI) for a product, line of business, or other venture. They are the first to flag the associated risks and can introduce level-headedness into decisions impacting the future financial stability of the company. 

Adding value to M&A-related activity

The CFO plays a key role in selecting acquisition targets. They also will be a lead negotiator when working with organizations seeking to acquire their business. And when an acquisition occurs, the CFO is becoming increasingly responsible for post-merger integration efforts. 

Additional CFO responsibilities

A recent McKinsey survey indicated the areas in which CFOs are gaining increasing influence and responsibility within their organizations:

• Investor relations
• Board engagement
• Post-M&A integration
• Procurement
• Digital transformation

CEO vs. CFO

The chief executive officer (CEO) leads a company as the highest-ranking executive. The CEO is often the face of a company, representing the business in the press, in front of investors, and before the board of directors. 

While the CEO and CFO often work closely together, they have different areas of focus and responsibilities within the organization. The CEO is responsible for the overall direction and strategy of the company, while the CFO is responsible for financial management and performance. CFOs often report directly to the CEO, though they will work closely with each other to lead the business forward.

Benefits of having a CFO

The most valuable CFOs are visionaries. They know how to work closely with other leaders to make decisions integral to company success — while maintaining an eye toward the future.

Hiring a high-performing CFO is an investment — but SMBs can expect to gain significant value in exchange. 

Industry knowledge

Hiring an experienced CFO brings specialized expertise to your organization. They know what strategies related to your business’s cost centers are more likely to yield the desired results. 

Hindsight through experience

A CFO previously involved with an IPO is invaluable to a CEO. Their experience can help a fast-growing SMB to get on the right track to going public. Sames goes for mergers and acquisitions. Gaining that kind of growth experience can be the difference between the winners and losers in a crowded industry. 

Reduced risks 

Debt service coverage ratios, tax compliance, employment law, regulatory obligations: the CFO knows these risks and more and ensures the company gets far out in front of them.

Better decisions

It’s the CFO’s job to analyze the data behind critical company decisions. Having that kind of support in your corner should enhance your growth trajectory and attract investor interest due to strong fiscal prudence. 

When Should You Hire a CFO?

Once the CEO and existing financial staff no longer have the competencies or bandwidth to control the company’s financial management requirements, it is time to hire a CFO. 

When do you need a CFO?

• Developing a growth strategy: both internal and external parties will require complex insights into company financial performance. 
• Creating standard operating procedures: the business needs scalable, repeatable accounting and financial processes to sustain itself. 
• Fulfilling legal obligations: As the company grows, tax and regulatory requirements will increase in complexity. 

Often, startups and SMBs will turn to fractional, part-time CFOs to address critical needs before committing to a full-time hire.