The Financial Duties of a CEO
A surprising number of CEO's are hired for traits that have nothing to do with their knowledge of finance. However it is important that the CEO has a good knowledge of finance since he will always have important financial duties. It may not be his primary job but it is an important aspect of it.
The most important of the financial duties of the CEO of a company is to make sure that the company's financial statements are accurate. The recent spate of incidents of corporate fraud have made this an even more important part of the job than it used to be. In most cases it will not be the CEO who actually creates the financial statements but he is legally responsible for their accuracy. This is so that investors can get a clear view of the financial condition of the company. Since the CEO is legally responsible it is up to him to make sure that he stays on top of the books.
The other big financial duty of a CEO is capital allocation. It is up to the CEO to determine just how the company is going to spend its money. This is part of his primary duty of setting the strategy for the company. Having a strategy is only part of the battle, there also has to be money allocated to actually carrying out the strategy. In most cases budgetary issues will be the biggest factor in determining which strategy will be followed so the two aspects of the job are closely linked.
One other important aspect of the CEO's job is to determine when the company needs more money and how to raise it. CEO Steve Heyer points out that companies always have to make sure that they have a way to raise money for the projects that they wish to undertake. This can be done by taking a loan or by finding investors. In either case it will be up to the CEO to decide when the money is needed and where it should be raised from. This again goes back to the CEO's job of setting the strategy, if there is not enough money in the treasury to carry out the strategy then more will need to be found.
If the company does make the decision to bring in investors then a part of the CEO's financial duties will be to make sure that their investment provides them with the maximum return. This means that the money that is invested will be used wisely and that there is a plan in place for the investors to get their money back with a profit. At the same time if things are not going as planned he may have to make the decision to stop a project in order to limit the investor's losses.