What is a CFO? What is a CFO's Role?
This morning I caught up with Midland's Ask the Permian Land Girl radio host, Kimberly Smith, to talk about CFOs, what CFOs do, how their roles differ from CPAs and Controllers, the career paths to the CFO office, and why private companies choose to outsource CFOs. Kimberly asked me to participate in her radio series Agents of Change after hearing about The Energy CFO from business owners we have helped.
The Energy CFO is a unique firm I started in Eagle Ford (oilfield) focused on helping private energy and technology companies (Yes, we do digital oilfield technology too). The Energy CFO helps owners and their companies with lean start-ups, improve their cash flow and profitability in good times and in crisis, understand their economics and breakeven, implement solutions including procurement and inventory, along with strategic operations and financial planning, forecasting, change leadership, CFO coaching, and strategic advisory services.
Based on the feedback from the show, I decided to supplement the radio interview with a blog series that focuses on each one of the topics covered and provide more detail for those who are interested.
Part I: What is a CFO? What is a CFO’s role in Energy Companies Today?
CFO is short for Chief Financial Officer. The CFO is the officer primarily responsible for managing the financial risks of a corporation. If you ask a CFO what they do chances are that conversation will turn into a 3 hour conversation real fast. So lets keep it short and simple.
Here is what leading experts – consulting and accounting firm – have to say about the role of a CFO.
McKinsey & Co is a global consulting firm known for its thought leadership. McKinsey defines the role of a CFO as:
Deloitte is an accounting firm and largest professional services network in the world. Deloitte says today’s CFOs are expected to play 4 diverse and challenging roles:
I have worked as both a CFO and Controller for some of the largest companies in the world and some of the smallest. The scope and responsibilities of the jobs will differ depending on the size of the company, ownership, industry, sector, organizational structure, and the individual. Generally, I define the role of the CFO vs. the role of the Controller as follows: