Technology has streamlined and automated many of the traditional tasks that a Chief Financial Officer (CFO) - or indeed finance and accountancy department - would typically carry out.
Any company with ambition is now using cloud-based software to collate, analyse and communicate financial data. Cashflow control, risk management, company asset protection and performance measurement are among the functions that can now safely automated. Even meeting regulatory obligations can be programmed.
This leaves CFO’s free to become business leaders and influencers. Including engineering how digital workplaces manage their financial affairs and how they use data to create stability, profitability and business growth.
Data management and the role of CFO
Leaving the fundamental activities of a financial department to technology creates greater transparency and control. This enables CFOs to focus their role on three vital business viewpoints – historic, current and predictive data.
Forensic analysis can uncover waste, lost time, badly used assets and a host of other critical business intelligence. From this, comes the growing role of CFOs in supporting lean management and improved profit margins. It also ensures they can achieve even greater compliance to regulatory milestones.
Having so much end to end data to draw on means CFOs can now take financial health checks from any point in the company’s activities, on any given day. So, they are more likely to be consulted by other managers on such topics as daily resource assignment and cost control.
The third possibility afforded to CFOs from new technology is a greater ability to make predictions! The opportunities created by prognostic analysis are possibly the most crucial element of the changing role of CFOs. From a far more intuitive viewpoint - using a multitude of projections based on hard data - CFOs can better support executive teams and Boards to make crucial decisions with confidence.
CFOs and crisis management
The greater involvement of CFOs in crucial decision making extends to both business development, and crisis management.
You can’t mandate for everything. The COVID-19 pandemic was the perfect illustration of how businesses face unexpected threats and even substantial business interruption with little warning. However, the strongest survivors are likely to be those with a Crisis Plan in place. One built on a solid awareness of their current financial health and robust measures to cope with tough challenges.
The sort of questions that should be answered in a Crisis Management Plan include, for example, how will we pay staff if our income dries up temporarily, and which supplier relationships need to be prioritised in a cashflow emergency? It’s the sort of nitty-gritty that CFOs can map out, and then action to keep their company afloat in tricky times.
Matching expectations, managing change
Greater involvement in daily decision making and business planning means another aspect of the contemporary role of CFO is communication. Having such a richness of data - and greater powers of analysis - is all well and good. However, that needs to be effectively delivered to the rest of the management team.
This can mean juggling the expectations, priorities and aims of a multitude of stakeholders, and being able to deliver hard truths with confidence. It also involves greater proactivity. A CFO needs to use their far clearer perspective to find business threats and opportunities, and then they must be willing and able to present a compelling case for change and action.
All elements of the changing role of CFOs culminate in one theme. They are taking on leadership positions and carrying heavier responsibilities.
The most successful and appreciated CFOs are combining in-depth and realistic financial reporting with analysis and insights that are business catalysts and essential survival and growth platforms.
Which means the role of CFO carries new challenges, as well as more opportunities to take a seat in the board room!