Where Finance Needs to Focus

If a finance department knows where the money is spent and still remains silent, then there’s stupidity in its forecasting.

Perhaps, a company without an effective CFO, is like an entity without an able advisor. When you think of scheduled spending or diversification through projects, firstly you have check your own coffers. 

And who can better give a synopsis of your company’s performance better than a competent CFO who should be knowing what’s done in the past, what’s prevailing scenario and what could be futuristic projections.

What it means to drive a strategy without an engaged workforce? What it means to talk about growth without profitable gains? What it means to invest in projects without managing risks? 

Whoever makes a strategic plan, but it’s a CFO’s role to check its validity and viability. Certainly, in some companies, CFOs are like counsellors to CEOs. Simply, they are the people who advice either to invest in something or be away from ineffective ventures. If they come up with no concrete advice or analysis, then, may be, they fit to be just bookkeepers.

Well, a CFO knows what’s the overall income and from where the money comes in, and then, he equally knows how the spending goes and from where external funding is taken. He should, comfortably, have a sound financial strategy to take note of priorities and set guidelines for right investment plans. He should pinpoint the problems that are weakening cost-cutting initiatives. If an investment isn’t good, then he should be bold and frank in saying what he is supposed to.

When a CFO knows what to track, how to analyze figures and what to propose for the performance, productivity and profitability of the company, then, truly, he’s doing his duty. 

May be only a loyal CFO will care more to speak about a company’s business strengths and recommend advice to help a CEO in making key decisions. If he does this, verily, this is a seamless trait of a smart CFO.

I know a company that’s actively managed by an experienced CFO. More than the GM, in that company, the CFO, like a jack of all trades, plays a pivotal role. In fact, a good CFO must be like a custodian. On times, he should predict what investments can be useful and must give a transparent information to show company’s growth trajectory. 

What’s the use when a CFO practices silence to safeguard his own position and pay?

Once, I heard that when a CMD of a company was interested in acquiring a mortgaged firm, then it was his CFO who gave a ‘go ahead’ after discussions with auditors, bankers and budgeting team in terms of forecasted revenues. It’s almost more than three years, and that acquisition proved to be a profitable. Or say that was a successful deal.

When a CFO knows the declining financial health of a company, then he should, at least, speak up where the bottlenecks are and what could be the possible solutions and action plans. He should, honestly, sum up if there’re excess spending, inflated projects, unclear cost-cutting strategies or slack business expectations.

Indeed, a trustworthy and professional CFO can be an asset to a company. Such a person knows where problems persist and in what manner they can be solved. With his feasible insights and timely decisions, he can be like a tactical partner to a CEO.

Even, after decades of presence, when a company doesn’t make any remarkable monetary growth or take a lead position in diversifying its business by facility expansions and potential acquisitions, novel product launches or substantial savings, then there’s a flaw in the financial functioning.

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