A financial director (or a CFO) is responsible for overseeing the financial operations of a company. Their role encompasses a wide range of tasks, including:
- Supervising accounting work;
- Managing financial relationships with banks and government entities;
- Handling tax management;
- Planning and executing the company’s financial strategy.
A financial director must possess analytical skills and a good understanding of accounting standards. They must also be proficient in financial management tools and techniques, such as banking techniques and ratio analysis. In addition, they should have strong interpersonal skills.
Financial directors’ roles
The financial director is responsible for overseeing all financial activities of the company, including planning, cash management, cost analysis, risk management, taxation, investments, and other tasks. Typically, they do not carry out these duties alone; several employees work under their direct and indirect supervision.
The financial director must create financial plans for the company. A financial plan helps to determine short- and long-term objectives. It is based on a rigorous analysis of financial statements and budget projections and ensures the company’s financial viability.
Typically, companies conduct financial planning on an annual basis, but it is a best practice to have longer visibility (usually three to five years).
The financial plan includes the following elements:
- Financial statements forecasts, including income statement, balance sheet, and cash flow statement.
- Assumptions underlying the financial plan, including assumptions on revenue growth, interest rates, production costs, exchange rates, etc.
- Capital expenditure forecasts, including investments in fixed assets, research and development, working capital needs, etc.
- Forecasts and sources of financing, such as equity, loans, subsidies, etc.
Financial Director, Ensuring Effective Cash Management
The financial director is responsible for managing the company’s cash. They ensure that the company has the necessary funds to meet its financial obligations and maximize the return on unused cash.
The financial director makes decisions regarding investment placements in mutual funds, bonds, and other investment vehicles. They also make decisions on short-term financing options such as credit lines, factoring, and discounts.
Analytical accounting is at the core of a (CFO) financial director’s duties. They analyze the company’s costs to identify areas of efficiency and opportunities for profitability improvement.
To achieve this, they must have tools to analyze the company’s costs. This may involve a thorough analysis of budgets, expenses, and contracts to determine where expenses can be reduced without affecting the quality or efficiency of the company’s operations.
Financial Director and Tax Management
The financial director manages the company’s risks in general, with tax risk management at the core of their role.
They are responsible for developing and implementing the company’s tax strategy. Their role is to continually minimize their tax costs and comply with relevant tax regulations.
To achieve this, they must closely monitor changes in tax laws and regulations, become informed on tax case law and administrative practices, and advise the company’s management on ideal tax choices.
Additionally, they oversee the preparation and timely submission of tax returns, ensuring that declarations are accurate and complete in compliance with relevant tax regulations. They also manage the company’s relationships with tax authorities and defend the company’s tax positions.
The Skills and Education Required for a Financial Director
To perform their functions, a financial director must possess several technical and managerial competencies.
Technically, a financial director must have a solid knowledge of finance and accounting. Most financial directors hold university degrees in finance, accounting, auditing, or control, as well as a significant number of graduates from business schools.
This is a position of responsibility that requires team management skills and extensive experience. Generally, job postings require a minimum of seven years of experience.
Considering their role, here is a non-exhaustive list of competencies required:
- Budget management;
- Management control;