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As a startup, every enterprise will have an accountant or might outsource their accounting function. Since the amount of transactions will be limited, it will be easier to have the view of the overall financial status.

But as the enterprise grows, it gets complex. As a competitive manufacturing industry, the role of a Chief Financial Officer (CFO) extends far beyond the traditional accounting functions performed by an accountant.

In this article we can see the roles and responsibilities that grow as the organisation grows in scale of volume and value.

Accountant – At an initial phase

Financial Record Keeping and Reporting

  • General Ledger Maintenance: Ensuring accurate and up-to-date general ledger records.
  • Financial Statement Preparation: Preparing financial statements such as income statements, balance sheets, and cash flow statements.
  • Debtor and Creditor outstanding : Vendor and Customer records and reconciliation
  • Inventory Valuation 
  • Bank Reconciliation
  • Tax Compliance: Filing corporate, sales, and property taxes, ensuring compliance with all relevant tax regulations.
  • Payroll Processing: Overseeing payroll calculations, deductions, and tax withholdings.
  • Ratio Analysis
  • Auditing

Tool for the accountant

For performing the accountant’s duty a good accounting software will be handy. 

Chief Financial Office (CFO) – At a growth phase

Inventory Management

  • Inventory Valuation: Determining the value of inventory using methods such as FIFO, LIFO, or weighted average.
  • Inventory Reconciliation: Reconciling physical inventory with accounting records.
  • Inventory Control: Implementing systems to ensure accurate inventory levels and minimize losses due to theft or obsolescence.

Treasury and Risk Management

  • Cash flow management: Optimizing cash flow to ensure liquidity and minimize financing costs.
  • Working Capital and Term loans: Closely work with Banks and Financial Institutions to ensure that timely actions are taken to fill the the gaps.
  • Risk management: Developing and implementing strategies to manage financial risks, such as currency fluctuations, interest rate changes, and commodity price volatility.
  • Debt management: Managing the company’s debt portfolio, including refinancing and interest rate hedging.

Internal Controls

  • Internal Control Systems: Implementing and maintaining internal control systems to prevent fraud, errors, and inefficiencies.
  • Risk Assessment: Identifying and assessing financial risks to the company.

Cost Accounting

  • Cost Analysis: Analyzing manufacturing costs to identify areas for improvement and cost reduction.
  • Standard Costing: Developing and maintaining standard cost systems to measure the efficiency of production processes.
  • Variance Analysis: Identifying and analyzing variances between actual and standard costs to assess performance.

Strategic Planning and Financial Modeling

  • Long-term financial planning: Developing and implementing comprehensive financial strategies aligned with the company’s overall business objectives.
  • Scenario planning: Analyzing various potential future scenarios and their financial implications to inform decision-making.
  • Risk assessment and mitigation: Identifying and evaluating financial risks, developing strategies to mitigate them, and ensuring compliance with relevant regulations.

Capital Allocation and Investment Decisions

  • Mergers and acquisitions: Evaluating potential acquisition targets, negotiating deals, and integrating acquired businesses.
  • Capital budgeting: Assessing and prioritizing investment opportunities based on their financial returns and strategic fit.
  • Cost-benefit analysis: Quantifying the financial benefits and costs of proposed projects or initiatives.

Financial Reporting and Analysis

  • Investor relations: Communicating the company’s financial performance and strategy to investors, analysts, and other stakeholders.
  • Financial analysis: Interpreting financial data to identify trends, opportunities, and areas for improvement.
  • Regulatory compliance: Ensuring compliance with financial reporting standards and regulations, including those specific to the manufacturing industry.

Technology and Innovation

  • Financial technology (FinTech): Evaluating and implementing new technologies to improve financial processes and efficiency.
  • Innovation funding: Assessing and supporting innovative projects that have the potential to drive growth and profitability.

Leadership and Team Management

  • Financial leadership: Providing strategic direction and guidance to the finance team.
  • Talent development: Recruiting, developing, and retaining top talent within the finance function.
  • Cross-functional collaboration: Working closely with other departments, such as operations, sales, and marketing, to support business objectives.

Tools for CFO

If the CFO has to deliver his optimum performance, he or she would need a 100% tightly integrated ERP system with end-to-end COGS based accounting configured. 3rd party payments Apps, BI tool for MIS real-time reporting.

How does a COGS based accounting software works?

Conclusion

In essence, a CFO in a complex and competitive manufacturing industry is a strategic partner to the CEO and executive team, providing financial insights and guidance to drive sustainable growth and profitability. Their responsibilities extend beyond traditional accounting functions to encompass a wide range of strategic, operational, and financial matters. 

Hence complimenting a CFO along with the accountant will be the stragtegic move that the organisation has to choose on the path of its rapid growth.

Organisations that don’t recognise this pressing need will suffocate with customer dissatisfaction and day-to-day fire fighting will be their way of life.

S. Vijay Venkatesh

Author S. Vijay Venkatesh

The author of this article S, Vijay Venkatesh is the MD and CEO of Syscon Solutions. He has put togethar over 4 decades of Manufacturing Industry & ERP experience. At Syscon he has handled over 150 ERP implementations for various verticals manufacturing industries.

More posts by S. Vijay Venkatesh

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