A financial director is the professional responsible for using the monetary resources of the organization in the best possible way, detecting opportunities that generate investment and savings for the company.
The financial area is a support in any organization and in it lie the decisions of investment , savings , indebtedness and budgets of the other areas. The person in charge must have, in some way, notions about the operation of the entire organization in their expenses, purchases, hiring and periods of increased activity. Which is essential to schedule the budgetary execution of the resources available for the period.
The person who takes care of it is what we call the CFO.
What are the functions of a chief financial officer?
It depends on the type of organization, whether it is public or private, since both require one, but in general the functions are as follows:
- Ensure the correct and timely use of company resources.
- Generate the annual expenditure budget.
- Project revenue estimates with historical information and make periodic balances.
- Prepare the company’s income statement.
- Detect investment opportunities for the company in the stock market, the market, the public sector and the industry.
- Warn adverse economic situations of inflation that could affect the price of products.
- Implement financial control mechanisms.
- Supervise internal financial audit processes in the areas of the company.
- Keep financial commitments up to date with suppliers and the fiscal institution.
The chief financial officer must be in permanent communication with the other functional areas; as Production, Commercial Area, Human Resources, Legal and of course, the General Management, to report on the situation of the company in terms of income and expenses and thus adjust to the resources available for the investments that each area needs, for which plays an advisory role in all departments.
What knowledge should a financial director have?
The profile of a financial director is of a person passionate about finances and to some extent, cost accounting , because they are the tools he will use most in his professional work. In addition, it is necessary to have specific knowledge in subjects such as financial mathematics, to read and interpret results, as well as to make your own calculations; in current and corporate finance to interpret current situation results.
It is also relevant for projection exercises to manage the tools for calculating the net present value (NPV), to prepare flows for future periods and additionally, the calculation of internal rate of return (IRR), for the evaluation of investment projects .
Generally, the professionals who occupy these positions are accountants or administrators of companies with postgraduate degrees in finance, since their initial training does not have the same financial-accounting intensity as that of an accountant. Therefore, they must specialize through diplomas and postgraduate degrees.
In summary, a financial director is responsible for managing the monetary resources of the organization, making decisions that are argued economically for the welfare of the organization.