The challenges facing CFO's


The challenges facing CFO's

true 03 September 2020

The technology that has replaced some of the traditional roles carried by a Chief Financial Officer has also supported their transition into positions of greater leadership and influence.

Big Data has equipped CFOs with a wealth of financial reporting, analysis and risk management ability. This provides them with valuable transparency across forensic, contemporaneous, and predictive financial information.

It makes it far more likely that they will be consulted when important business decisions need to be made. Instead of heading up a small team in a corner office, a modern CFO is now usually constantly accessible and integrated into daily business operations.

As many of the more mundane tasks – including regulatory obligations – have been automated, CFOs also have more time to use their data riches to safeguard assets, maintain financial health and plan for the future.

However, all of this carries with it a new set of challenges.

Meeting complex expectations and managing risk

One of the primary challenges facing CFOs is juggling the expectations now placed on them. Instead of answering solely to a CEO, for example, you may now have multiple ‘bosses’ and a queue of departments seeking collaboration and communication.

A seat in the boardroom or role in an executive team for a CFO also carries with it the need to be constantly aware of differing priorities and aims. This includes constant risk awareness and management – internally, sector-specific, and in the economic and political sphere as a whole.

Communicating with confidence, and proactivity

The challenges facing CFOs include being able to communicate their findings with confidence in order to meet the often complex and even competing demands placed on them by different departments. However, even greater resilience and assured communication skills are needed when it comes to delivering harsh facts that do not support the expectations or aims of superiors or peers.

Modern CFOs need to be proactive and ready to step in when financial data highlights serious threats, involves considerable losses or could derail key plans and activities, as well as when they see efficiencies and opportunities for business growth.

CFOs need company-wide knowledge

To fulfil their objectives, chief financial officers must have a consummate picture of their company’s complexities, limits, threats and opportunities. This is the only way a CFO can engineer issues such as what data is collected and how, as well as the methodology, frameworks and aims used for analysis.

CFOs will need to know issues such as any legacy systems that apply, what external risks there are and what short, medium and long term business goals apply.

Assured analysis and reporting of financial data can’t happen in a vacuum. When a CFO has heavy expectations placed on them, without the support of their superiors and peers, it can be a source of enormous stress and frustration. This includes being kept ‘in the dark’ about issues that impact on the financial health and future of the company.

Accuracy, auditability and security

Lack of honesty from above can hamper the efficiency of a CFO, but they too have increased pressure placed on them to offer accurate, transparent and reliable data. This is not just to make businesses auditable, compliant and accountable. The need for accuracy is critical as important business decisions can hinge on the data supplied by a CFO.

Also, with all the pressure to create more usable financial data comes an obligation to be ever more aware of data privacy and security. CFOs often carry data management and control responsibilities, alongside their blossoming role in data generation and analysis.

Prognostic analysis

One of the double-edged opportunities and challenges facing CFOs is their greater ability to influence company processes and policies, but also business growth plans.

The CFO will increasingly be asked to provide data to illuminate key business decisions, such as product viability, the costs of exploring new markets, acquisitions and expansions or sale and purchase of assets.

For this, chief financial officers will need strong predictive analysis skills. As well as the confident communication and collaboration abilities mentioned above.

Leaders, influencers and innovators

Many of the challenges facing CFOs pivot on the growth in the importance of this role. They are no longer ‘number crunchers’ or bastions of compliance and risk management. Instead, they are being challenged to be leaders, influencers and innovators, highlight inefficiencies and risks, and underpinning business development and growth.

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