The Changing Role of the CFO: Providing Greater Operational Control Companywide
CFOs are emerging from their back-office roles in modern finance departments and evolving into valued strategists throughout their companies. In many cases, the finance department has become a cross-functional team, collaborating companywide to cut costs and solve business problems. It serves as the foundation of a business and can offer a unique perspective from a logistical standpoint. When it comes to the function of modern finance, it’s all about bridging the gap between financial controls and business strategy.
Technology has certainly helped in this regard. After all, modernizing the finance department with technology that automates the entire accounts payable process while also executing global payments has been vital to achieving greater operational control and business growth. That same technology allows finance teams to turn real-time data into actionable insights that go on to improve financial planning, business processes, business partnering, and a myriad of other value-add activities.
From analytics to AI, technology repositions the role and expectations of CFOs and their finance teams. The digitization and automation of tasks allow modern finance leaders to spend more time on analytics and establish deeper relationships with peers.
This, in turn, helps them broaden their connections and expand their organizations’ focus on the finance function.
Make no mistake; financial stewardship is still a significant function of the role. However, changes in finance require many CFOs and their teams to take on additional responsibilities, including driving decision-making and executing strategies. Often, these new duties land in the realms of IT and HR—sectors CFOs were previously not acquainted with. The changing role of the CFO and finance team has led many companies to view the function as a transformational change agent for operations.
Moving From Spreadsheets to Strategy
Though the future holds many opportunities for the finance function amidst these technological advances, changes to the role and expectations of a CFO won’t be without challenges. As with any time of change, CFOs will find themselves reprioritizing many aspects of the finance function over the next few years to ensure operational efficiency, fiscal responsibility, and the strategic coordination of many activities. They will have to focus on sustainable growth to meet the growing needs and demands of the finance sector.
Most will be up to the task. The last couple of years have put CFOs and finance teams through more than a few challenges and prepared them with solutions to handle the new tasks brought forward to them. Faced with lockdowns and closures due to the pandemic, finance teams found themselves in the position of building new strategies off measurable and time-sensitive outcomes and then disseminating the next steps to all necessary parties. Without their insights and guidance, most companies would have been forced to react retroactively rather than proactively addressing the situation based on relevant and real-time market conditions.
As businesses move into the post-pandemic world, it has become more important than ever for CFOs to offer greater operational control and visibility in project management within entire organizations. Fortunately, the means of doing so are straightforward and often entail the following:
1. Get the right executive team in place.
IPO stakeholders rely on companies appointing the right executive teams, and the changing role of the CFO has made this team member one of the most influential executives of all. In many organizations, CFOs are now involved in every arm of operations—sales, marketing, development, etc.—to oversee and understand the implications of financial decisions. Their input is often vital to success and can make a company much more attractive to investors when deciding whether to commit capital.
Furthermore, CEOs must personally attest to the accuracy of the financial results and integrity of the control framework based on CFOs’ guidance. Establishing a strong executive team from the start allows CFOs to flex their prowess and maintain control over all areas of their expertise.
2. Ensure books are audit-ready.
The market demands transparency, speed, accuracy, and reporting within SEC guidelines. Stakeholders in public companies also expect transparency and speed regarding financial and operational results. Companies must expand executive teams, accounting teams, and finance departments with experienced staff members to ensure financial information is accurate and honest.
3. Establish a convincing business case for going public.
Companies can gain capital for growth in many ways beyond IPOs. A CFO’s analysis of the alternatives can be critical to helping the management team decide whether going public is the best choice.
The changing role of the CFO is rich with opportunities, and technology is now available to support many of the new responsibilities on this executive’s plate. Including the finance department in operational decision-making will allow a company to grow more effectively with streamlined workflows and transparent reporting. Now is the time to ensure the CFO has the processes they need to become a true strategic partner in operations.