Almost everyone, one way or another connected with the commercial environment, will say that one of the most influential people in any company is a financial director, whose duties cover almost everything related to the income and expenses of the organization. It is for this reason that most often a person in such a position is at all the second most influential person. But as soon as it comes to what functions it performs, many are confused.
Who is it?
Today, we can confidently say that, if you do not take into account the CEO, then the most influential person in any company is the financial director. The responsibilities of this person include strategic planning, careful cost control, management of all kinds of information systems and, of course, reporting. Among other things, he takes a direct part in tax planning, including also such work as tax optimization and the establishment of a specialized internal control system in the company.
In order for the system of financial control and accounting to work normally, questions of personnel are also assumed by the financial director. His responsibilities include not only identifying key employees, but also, if necessary, drawing up a plan for their replacement. This is done with the aim that, if some person decides to quit a certain position, this ultimately does not turn into a disaster for the enterprise. In addition, he also performs a public function, that is, gives interviews to the media, speaks on behalf of the company, etc.
As you can see, considering who the financial director is, the responsibilities of this post and other nuances, you can understand that in fact he is not only dealing with issues that are directly related to the company's income. He also decides on various issues regarding personnel selection, PR campaigns, and many other elements.
What is the situation like?
For the reason that many do not even know the duties of the director, it often happens that people simply do not understand each other in the selection process. The General Director does not know exactly what tasks a financial director should perform, as well as what powers and responsibilities he should have so that he has the opportunity to perform these tasks in a quality manner. At the same time, a person getting a job does not understand what job responsibilities of a financial director are set in this company, not to mention whether he will succeed in fulfilling the tasks assigned to him.
If a specialized HR director deals with recruitment, he may also not know how to identify a specialist, as a result of which both the HR department and the CEO begin to pay careful attention to various formal attributes, such as work experience, education, knowledge of certain professional concepts and much more. Of course, it can hardly be said that such an approach is optimal.
How to identify a professional?
There is a more optimal approach to solving such a problem. First of all, you must understand that you are looking for a truly professional specialist who himself understands, for example, the responsibilities of the financial director of an enterprise, which he needs to fulfill the tasks assigned to him.In other words, you should look for a person who is not only distinguished by knowledge, but also knows how, using such knowledge, to achieve specific results.
Next, you must decide whether it will be a priority criterion for choosing a specialist whether the applicant owns certain tools, if they may not even be the responsibility of the financial director of the enterprise. In fact, this is not so important, that is, of course, he must have certain skills, but for the employer this is not the main thing. The main thing is the achievement of specific goals and results. You can’t hire a person only for the reason that, for example, he is fluent in developing a budget, since you must also make sure that he knows perfectly well why he is doing these or other things, and what exactly it turns out to be achieved in the end.
Functions and Tools
You should immediately remember the difference between functions and tools:
- Functions are the main responsibilities of the CFO. Each such function has a permanent goal, or even several, to achieve which a certain set of actions is formed. Each action, in turn, has its own result, the reachability of which can already be checked in the process.
- A tool is a means by which the duties of a financial director will be provided. The LLC and the manufacturing company will provide the specialist with different tools for solving the problem, but in any case, this concept is less ambitious. The tools include lending, accounting, ERP, KPI, balanced scorecard, finance flow management and many other elements.
Who is the specialist here?
It is important for the employer that the candidate perfectly understands his duties, perhaps the duties of an assistant financial director and some other nuances, but the most important thing is that he understands the goals that lie ahead. Indeed, in the process of development of any company, the exact definition of goals can change, because there simply cannot be the same goals for a small organization and an international corporation. It is for this reason that in order for you to understand the responsibilities of the CFO, a sample of which you will need to provide candidates, you will need to determine those functions that will hardly change during the development of your company (regardless of what you currently have use tools and what goals the company faces).
Main functions
For many people, the activities of the financial director are practically not clear. Many responsibilities are unknown to him and the tools available to him for fulfilling the tasks, however, if you still could not find the optimal set of human functions for yourself in this position, you can set approximately the following list:
- Formation of a corporate strategy, as well as planning of actions in the financial sector, which could ensure the maximum growth of the company's value.
- Control over all issues regarding budget and management.
- Full control over finances, including cash flows, payables and receivables, ensuring the fulfillment of any obligations and much more.
- Providing all the necessary information for the work of managers and specialists of the company.
Satisfying the need of a business for money
Money is the driving force of any business, because if there is not enough money to make any current payments, then in the end the work process will simply stop, as the supply of raw materials, services and supplies will stop, and the workers will stop working. At the same time, there is no difference in how much profit a company has, because the most important thing is whether it currently has the means to pay bills.It is for this reason, when considering what is the responsibility of the financial director, the first thing to consider is ensuring the right amount of funds to pay the company’s bills.
In order to achieve this goal, there are a huge number of tools, including such as:
- attraction of various borrowed funds;
- forecasting possible cash flows;
- attracting from various sources of investment and much more.
As mentioned above, the financial director can use any tools, but the most important thing is the result, that is, the company must always have money in order for it to pay its bills. That is, he can even shift some functions to the duties of the deputy financial director, if he considers that it is necessary to complete the task.
Company planning and coordination
In many ways, this function can be called providing for a number of others, since without it it is simply impossible to implement most of them.
In order for money to be constantly present in the business, the financial director’s responsibilities include the compilation of a forecast plan, which contains complete information on how much money the company is going to receive for a certain period of time, and how much and when it will need to be spent to meet its needs . Moreover, he should not and cannot come up with this; he should have a production plan from the appropriate director, which will contain information about what exactly and in what quantity the company will produce. At the same time, the production director cannot decide in what quantity and what exactly he can produce until the sales director gives him an accurate forecast on what and in what quantity he is going to sell. Thus, this entire information chain ultimately forms the planning and coordination of the company.
It turns out that there is no way for the CFO to ensure the availability of funds until there is an agreed set of a number of plans, on the basis of which the final plan of action will ultimately be built. At the same time, since a whole series of people will have to plan their own activities, then someone should be assigned the coordination of all these actions, and this is what is the responsibility of the financial director of the company.
Why is the CFO involved in these actions?
First of all, in the work of the financial director, all these plans represent initial information on the basis of which he will make his own forecasts of cash flows, as well as engage in the formation of financial plans. In other words, the final stage of all planning is assigned to it, since it determines the final product and, due to this, must coordinate the actions of all other departments.
In this case, one must understand the fact that all these plans must be carefully coordinated with each other, and at the same time they are compiled in different physical quantities. Moreover, the only indicator by which they are all united among themselves is money.
Ensuring company performance
Maximizing profit is not the main goal, and many companies often go aside when they have a financial director working in this direction. The functions and responsibilities of this specialist should be to ensure the most efficient operation of the organization, and as a result, profit will already increase. However, there are several important subtleties that need to be considered.
Acting correctly means moving towards the main goal that the company sets itself.If the main goal is to make money, then to act correctly is to engage in the production of services and goods that are currently in demand by society. The definition of this task is already what the founders should do, as well as the top management of the company. At the same time, for some, this goal represents an increase in the status of the founder, while for others it is charity or something else.
At the same time, you need to understand that you need to move towards this goal using a method that is the most effective, and this implies not only an increase in labor productivity in any production, but also the efficiency of each member of the staff, whether it is a deputy financial director, responsibilities which may consist only in helping your immediate supervisor, or the general director, who has the main responsibility for the work of the organization.
It is also worth paying attention to the fact that in the process of development of the company, it will constantly change, as well as expand the object of management. Initially, this applies solely to resource management, including material, but as soon as the organization begins to develop and enter a constant working pace, changes in the structure, rules of work begin to appear, the composition of the personnel changes, etc. In other words, the organization itself also becomes the object of management.
Why should the chief financial officer deal with all this?
The responsibilities of the head are assigned to the financial director for the reason that the main visible sign that determines the effectiveness, as well as the status of the company, is economic success. In other words, the main sign of a company's success is its profit, as well as the cash flows managed by the CFO. It is this person who sets the rules for determining what exactly is considered “effective actions” within a particular organization. In this regard, the financial director is the person who coordinates the entire process of how a simple company will turn into an effective one.
Economic Security
Any company has the risk of ceasing to exist at one time, and at first the risk of bankruptcy is determined by whether the organization can pay its debts on time. However, over time and the development of the company there are even more risks, including political, market, leaving key individuals, etc.
On the one hand, a large corporation has more opportunities to suffer from all kinds of adverse events, while small entrepreneurs are less exposed to this risk (they, if I may say so, are less noticeable and have less time to make ill-wishers and competitors). But at the same time, a large corporation has more resources, as a result of which it is trying to control such risks, as well as carefully insure against them.
The duties of the financial director do not include the direct elimination of risks, they are given orders to other members of the company. For example, if one of the important risks at the moment is a possible loss of image, then in this case the financial director will not have to strengthen it on his own, but will have to give orders to the person involved in the PR campaign. If we are talking about the risk of losing a key employee, then the order is given to the personnel department, while the CFO is in control of how these tasks will be performed.
