Table of Contents
As the Chief Financial Officer (CFO), it is your role to monitor the company’s financial performance and ensure that it is meeting its financial goals. To achieve this, it is essential to regularly review updates and prepare monthly management accounts to track progress. If the company is not meeting its targets, CFOs must work with Business Unit CFOs to develop a plan to get back on track. Typically, CFOs focus on monitoring year-over-year (YOY) sales revenue, EBIT (earnings before interest and taxes) compared to the previous year and budget, and free cash flow. If there are any issues, CFOs will delve deeper to understand the problem and come up with a solution.
Staying on top of performance is key. To create the optimal level of tension and solve problems in an efficient manner, it’s important to ensure that tasks are delegated appropriately. Communication within the organization must be well communicated so expectations can be clarified externally – building trust with investors and stakeholders alike while addressing any challenges that arise swiftly.
It is important to ensure that the financial reports are accurate and complete, a process known as a “clean close.” To achieve this, it is necessary to have a strong accounting function and to review the balance sheet with the Business Unit CFOs and relevant finance VPs. A restatement of financials can be a major issue for any CFO, and they may utilize the internal audit function if they have concerns about the accuracy of the reporting. In addition, many CFOs also welcome scrutiny from the audit committee and board to ensure accountability.
The Corporate Finance Team and VP of Finance will collaborate with the VP of Investor Relations to finalize key reporting KPIs, including sales growth, EBITDA and EBIT margins, working capital, free cash flow, leverage, and any operational KPIs relevant to the quarter once the books are closed. They will ensure that the narrative for the quarter aligns with their published strategy and flows seamlessly from one quarter to the next.
Before releasing the financials to the market, the Board of Directors must sign off on the materials. The audit committee will review the numbers closely, while the Board will focus on the narrative. CFOs tend to find it helpful to have the Board challenge management, as it helps prepare them for the analyst call.
The VP of Investor Relations will be closely watching the market’s reaction and collecting questions from analysts on the day of the call. The CFO will be spending their day preparing, reviewing the script, and supporting analysis, and expecting any potential challenges. They will present the financial results and answer any questions from analysts during the call.
Overall, the role as the CFO involves staying on top of performance, ensuring a clean close, establishing the fact base, building a narrative, and preparing for and presenting during the earnings call. It’s a lot of work, but it’s crucial for maintaining confidence with the markets and ensuring the success of the company.
