Past Role of CUFF The past role of Chief Financial Officer(CUFF) revolved around the following key core areas 0 Performing the role of the operating manager of finance function, controlling compliance and statutory reporting in publicly traded companies. 0 Counseling role or Advisory role and help in bringing about orderly and control centric growth in companies. 0 Performing the treasury duties which involve decision making on how to invest the company’s money, taking into consideration risk and liquidity. Deciding the Capital Structure of the company.
The CUFF should determine the best ix of debt, equity and internal financing in the company. Present Role of CUFF Currently the Indian economy is in a crisis situation with increasing Current Account Deficit (CAD) and huge fall in the rupee. The situation is getting worse with the possibility of US Attack on Syria. The GAP growth of India is at the sub 5% level and WHIP inflation has rose above 6%. The role of CUFF becomes even more important in the current situation with the rupee depreciating against the dollar and negatively impacting the balance sheet of most of the Indian companies except those firms which are export oriented and IT Firms.
Scoffs in the present day organizations are largely restricted to the responsibilities of providing the top management with financial data gathered from both outside and within the organizations. The finance department acts as a medium through which business plans are prepared based on financial projections. In regard to India, a CUFF today is concerned with the following issues 0 A major chunk of the Indian Coffs believe that revenue growth/preservation, cost reduction and maintenance of talent pool are the major organizational challenges.
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Presently, Indian Scoffs have limited participation in the strategic role. 0 Most of Indian Scoffs are not involved in sustainability strategy and governance. Sustainability functions include internal controls, compliance with tax regulations, performance measurement and reporting of financial and non financial indicators. CUFF needs to ensure and monitor that business operations take place efficiently, loss making products or activities are terminated and cost saving measures are being executed adequately. 0 Scoffs consider scalability and valuation as biggest drivers of
Mergers and Acquisitions activity in the industry. Though the Indian economy is down at the moment, Scoffs expect that companies with good fundamentals and good valuation will be prospective targets for acquisition. Most Indian Scoffs are currently not considering outsourcing their business process except for multinational companies which do so due to compulsion because of global contracts entered into by their parent companies. 0 Currently Scoffs don’t depend on proactive data mining and data analysis tools for their risk management system. It is imperative that the
Scoffs adopt these tools in order to reduce the occurrence of fraudulent activities. 0 Cost of credit is worrisome for Scoffs in the Financial Services Industry with the government tightening liquidity in the system and increasing MS in order to prevent the depreciation of the rupee. Future Role of CUFF The Global Financial Crisis in 2008 has put the spotlight on Indian Scoffs more than ever before. The Corporate Governance responsibility of CUFF has increased, the CUFF became more involved in operational and strategic decisions to the company, management and assumed the role of CEO designate.
CEO also assumed the role of instilling sense of confidence among the stakeholders namely employees, customers, partners and suppliers. 0 Alongside the traditional mandate to provide financial insights and analysis, Scoffs must describe a greater involvement in supporting and developing strategy and guiding key business initiatives. CUFF of Oxide Industries , A. K. Musketeer , had to cut down on replacement for automotive batteries due to under capacity. In 2011 A. K. Musketeer expanded the capacity which not only helped
Oxide to tide over demand but also achieve greater market share. Under his purview, Oxide tied up with Us-based East Penn Manufacturing Co. And Japan’s Shin-Kobo Electric Machinery Company to improve processes, designs, and quality control. Scoffs must be versatile individuals with the talent to meet a continually changing set of circumstances. The CUFF of L Y. M. Detestable was instrumental in setting up L finance Limited which is a wholly owned subsidiary of L. Y. M. Detestable hedged foreign currency loans well in time, which would otherwise have meant provisioning RSI. 00 core when there was depreciation in rupee. He was an advocate of not only churning out profits but also managing risk effectively and protecting the margins of the company. Scoffs must still attend closely to cash flows, controls, costs and risk. Also, they should continue to seek profitable growth irrespective of the state of the economy-whether it be boom, recession or depression. Mr. Oshkosh Chatterer,CUFF of Data Steel, is an advocate of raising capital ahead of requirement and managing crisis through management of liquidity.
Coffs should leverage the advancements in genealogy for taking decisions. CUFF has to use decision support systems available in the field of finance for making key decisions. Let CUFF Rajah Tendon used technology to track availability of rooms at all its properties across the country. This helped Rajah Tendon in better management of the rooms and led to revenue minimization. Rajah Tendon also used technology to reorganize the logistics network such that redistribution between warehouses was minimized. CUFF should take ownership and actively manage the financial drivers of value.
Example: For a technology many, value drivers are completing a product development project by creating new technology or establishing partnership with a technical university. If the product development project has a long term benefit but a short term financial cost then the CUFF should give priority to the drivers of value and act in the long term interest of the company rather than short term gain. 0 CUFF is responsible not only for the past and present financial situation but is also an integral part of a company’s financial future.
A CUFF must be able to identify and report what areas of a company are most efficient and how the company can capitalize on this information. For Example, the CUFF of a company like MicroVAX in India should be able to pinpoint which mobile models are making the most revenue and how this information can be used to improve the company in the future. 0 CUFF should be ethical in his behavior. It is the lack of ethics that has led to major failures like Astray and Enron in the past. Scoffs should drive Corporate Social Responsibility (CARS) activities in the organization and be truly responsible to the society.
The Companies Bill, 2012, mandated a 2 percent spend on CARS activities. This has to be viewed by Scoffs as an opportunity to give back to the society and gain the confidence of the public. This would also build goodwill and trust to the company among the public. Conclusion A great CUFF differs from a good CUFF by the way he is able to project the long term financial picture of the company and by the efficacy of his analysis. The CUFF is the right hand of the CEO, the co-pilot who navigates the company through the storm and manages the short term performance measures and enables long term value reaction.
The traits which separate a successful CEO from an ordinary CEO are the following-professional focus both including internal focus on operations and external focus on strategy, previous expertise across multiple roles in the finance function, knowledge of various business areas and global experience. In addition to performing financial roles in an exemplary manner, CEO has to do well on the non financial roles also in an exemplary manner in order to be effective and should have good communication skills and knowledge across various business domains.