Managing operational efficiency is key to the effective overall financial management of a company, and particularly to maximizing cash flow from operations. As the CFO is the financial manager of a company, he/she must have a comprehensive knowledge of and a role in all facets of the business, particularly operations.
Managing operational efficiency is key to the effective overall financial management of a company, and particularly to maximizing cash flow from operations.
For instance:
By analyzing the answers to these and other questions, the CFO can create an actionable plan to address operational issues and implement management tools to indicate when and where changes are needed in operations.
As Ken Fruscella of FocusCFO states, “the CFO must work with the CEO and management team to develop a plan to implement operational strategies and develop metrics to ensure that the long-term strategy is on track, or to determine if corrective actions need to be taken.” In other words, the CFOmust always have an “ear to the ground” and be aware of changes in operations that will requiredevelopment of new measurements.
The CFO will also project operational capacity needs as the company grows and determine how capacity can be expanded. With greater size and complexity, operations become more difficult to manage. Management reporting tools are essential to effectively make decisions and to drive performance and strategy. Reporting will focus on company and industry specific operating metrics. The CFO will do the following:
While the CFO is not involved in the day to day management of operations, he or she drives operational analysis, planning and strategy. This requires a very specific skill set that only a CFO can bring to a company.
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