What are the missions of the financial departments of CAC40 groups?
In this article, Louis DETALLE (ESSEC Business School, Grande Ecole Program – Master in Management, 2020-2023) explains what are the missions of the financial departments in CAC40 groups.
What is the use of the Finance Department?
In a sentence, the Financial Department should be able to answer the following question at any time: “Who should I pay, when and how ?”
The finance department is a key department of the company as it implements financial tools to assist in strategic decision-making, and thus prevents financial risks. In other words, the finance department helps plan the development strategy of the company by ensuring all financial resources are available at any time for example.
For that matter, the financial department of the company works neck and neck with the Board of Directors of the CAC40 Group which define the strategy of the Groups for the months and years to come. The Chief Financial Officer (CFO) will then ensure that the financial resources needed by the company are available to the company at any time of the strategy implemented.
What are the main topics that the Financial Department deals with?
There are a great number of missions that the Chief Financial Officer will have to conduct, but here are the main ones:
About the Group’s solvency: At every time, a CAC40 Group must be solvent, that means they are supposed to be able to reimburse their debts at the previously agreed-upon time. To assess the ability of the Group to do so, the Financial Department has to create Excel models to anticipate the debt repayment over a short, medium & long terms. Obviously, that means the Financial Department will also conduct many calls with the banks to ask for the implementation of credit lines.
Ensuring the management of the company’s cash flow, i.e., its capacity to collect sufficient income to cover its operating cycle: permanent monitoring and management of the teams (customer accounting, supplier accounting, cash flow, etc.), and of the operational activities. The implementation of treasury boards allows the monitoring of the above criteria.
To perform well the previous missions, the CFO (and the Finance Department more generally) has to organize meetings with the lenders, the suppliers and the clients in order to negotiate the payment periods. Indeed, to alleviate the treasury of the CAC40 Group, many solutions exist & it is the CFO’s job to invent new ones.
What is interesting and demanding as a CAC40 CFO?
First of all, since the role of the financial department is crucial to ensure the sustainability of a company because they deal about the solvency of the Group, this suggests that they are implicated in every decision made. They intervene upstream and downstream of each management decision and comes up with corrective measures in the event of financial problems. For that matter, working as a CFO of a CAC40 company requires the ability to see the big picture.
On the other hand, since the financial departments of CAC40 groups are audited every year, the finance department must keep a written record to justify any accounting item from a legal point of view. This requires a high level of organizational skills and a minimum of legal knowledge for the time when the Big 4 firms will conduct the audit of the Group.
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Resources
Association Nationale des Directeurs Financiers et de Contrôle de Gestion
Youtube Interview with Gilles Bogaert, CFO of Pernod Ricard
About the author
The article was written in November 2022 by Louis DETALLE (ESSEC Business School, Grande Ecole Program – Master in Management, 2020-2023).