Essential Financial Management in Organizations

There are countless organizations throughout the world providing services to government agencies, educational institutions, medical facilities, and individuals. No matter what type of services an organization provides or to whom, financial management is essential to their economic viability. Consequently, many questions must be asked and decisions made pertaining to the finances of an organization. An organization must take into consideration, what long-term investments they should partake in, how they plan on financing the long-term investments, their liabilities and short-term assets, and how daily financial activities will be conducted. While these are not the only questions and decisions an organization must entertain, they are crucial

Regardless of the industry or sector, a CFO has an integral role within an organization. In a recent survey of “300 C-level executives, 94 percent agreed that the CFO is one of the most important positions for companies today” (Khiyara, 2015, p. 4). For that reason, he/she must be mindful of the roles and responsibilities in which the position entails. Although, a CFOs main role is to advise the CEO and Board of Directors about the organizations future, they must also assume a leadership role. According to Witzel (2010) “the CFO’s role has grown from narrow financial management to broad involvement in organizational leadership” (p. 26). Leadership is the knack of getting work completed by other people. According to Goleman, Boyatzis, and McKee (2013) “great leaders move us. They ignite our passion and inspire the best in us” (p. 3). Granted, CFOs work with the treasurer and controller and do not necessarily have direct contact with the entire financial department; however, they are in a key managerial position thus, the center of influence. Therefore, it is a CFOs responsibility to conduct them-selves in a manner that portrays integrity, self-confidence, courage, and commitment. Although, the CFO may not have direct contact with all the employees, “50 to 70 percent of how employees

Although, financial statements are created by accountants it is imperative for CFOs to review such declarations to confirm funds are being used advantageously. Consequently, CFOs must stay current with their accounting and financial knowledge to interpret such reports and adapt to the ever changing competitive environment. The data within the reports assist the CFO with the planning and managing of budgets, projects, and purchases. Witzel 2010 stated, a CFO could control waste “by analyzing potential new projects and eliminating those that were not worthwhile” (p. 27). Although, it is impossible to have a flawless sales forecast due to the uncertainty of the economy, CFOs should still examine the prediction of future sales. The forecast helps the CFO to determine the assets and financing needed to support those sales. The intent is to examine the relationship between investing and financing at the different level of sales. Khiyara 2015 stated, “visibility into the sales cycle is paramount and the consequences of poor analytics and visibility can be monumental” (p. 5). Khiyara 2015 also stated, “revenue management is critical to the growth and success of the company and it is critical for CFOs to be included in the sales cycle” (p. 5). Thus, if a CFO stops pursuing continuous education the organization will suffer from inadequate and/or obsolete knowledge. Moreover,