3 Financial Management Objectives for CFOs
3 objectives for the CFOs of entrepreneurial and mid-market companies:
- Integrity in Financial Reporting: Implement the proper personnel and processes for reliable financial data. Financial reporting is historical; it tells “what happened.”
- Sound Financial Analysis and Synthesis: With solid financial reporting disciplines in place, CFOs can focus on what it means. But they must not stop there. CFOs also need to synthesize the information and help the organization’s decision-makers think about the future. How do the financial results affect strategic and operating decisions, and vice versa.
- Tight Financial Management (Budget and Cost Control): The budget (or the financial forecast, which is more flexible and preferred by some) paints the future financial picture for the organization’s leaders. First, it connects current decisions to expected results. Then, actual results can be measured and compared to expectations. This calibrates the assumptions of the decision makers. Because it requires an understanding of the key value drivers of the business, this discipline also enables CFOs to identify specific areas of cost control that need addressed (which can be anything from a line item to an entire process).
The CFO must ensure that the first objective is achieved, but second and third objectives are where CFOs add the greatest value to a business. Therefore, those are the objectives on which he should focus his time.
