The Chief Financial Officer (CFO) is an executive responsible for managing the finances of the company. Over the last few years, the CFO’s roles & responsibilities have evolved from one who used to only be in charge of bookkeeping, reporting, and compliance to that of a strategic thinker.
Modern CFOs are expected to not only be number crunchers, but one who can derive insights from these numbers and drive data-backed decisions.
Over the course of this article, we would discuss the roles of modern CFOs and what it takes to be a great one.
What are CFO Roles & Responsibilities
At the baseline, a CFO needs to ensure that the company’s financial position remains healthy and comply with regulations in order to maintain smooth business operations. This means that traditional responsibilities such as business accounting, financial reporting, and budget tracking remain important.
The modern CFO would also need to set up their finance team as a strategic unit, able to analyze financial data and influence strategic decisions for the company. To achieve this, the CFO needs to build a team that can carry out financial projections, manage investments, financing as well as identify risks.
All of which is done for the purpose of maximizing business impact and reducing risk exposure. The ideal person for this position should have a keen understanding of their company’s internal operations and general industry trends the company is in.
What’s the ideal qualities of a CFO?
As someone tasked to maintain a tight control of company finances right down to the decimals while still being able to develop high level strategies, the role of a CFO is undoubtedly a challenging one. On one hand a CFO needs to be rigid and detail-oriented when questioned about financial compliance, but still have an intuitive and open mindset when making strategic decisions.
Embodying directly opposing qualities onto oneself is almost impossible, which is why he/she needs to understand their own limitations and build a team that can cover their own shortcomings. Setting strong financial knowledge aside, below are 4 qualities we think a CFOs job description should cover in order for them to be a great leader and deliver what is expected of the modern CFO.
- Leading through example
The CFO sets the tone that his finance team will follow, hence individuals that display a high degree of integrity and conscientiousness will naturally influence their subordinates. CFOs that maintain high standards of practice will also push his/her team to do the same, leading to more robust reports, analysis and reduce risk of noncompliance.
Furthermore, as the role of the finance department is evolving to one that is more strategic in nature as opposed to a supporting function, there needs to be a shift in skill requirement even at the ground level. Hence, CFOs need to lead the move in upskilling his/her team such that they will be more prepared for the new challenges to come.
- Business acumen
To become a successful CFO, the professional needs to see beyond the financial metrics. It is critical that a CFO can augment company decisions on strategic roadmaps, competitive response, and other corporate actions with their financial expertise.
In order to achieve this, CFOs would certainly need to have a strong foundation on the internal operations of the company. Furthermore, as the financial representative of the company, the CFO would need to be able to communicate company decisions to external stakeholders and investors alike.
- Value driven mindset
CFOs who want to deliver impactful results for the company would need to maintain a value driven mindset. This means contributing not just from the perspective of the traditional cost control, but even driving initiatives that lead to top-line improvements.
For example, according to Gartner, CFOs who spend time analyzing their company’s competitive differentiation and follow up with selective investing in these unique assets can lead to 42% higher long-term value creation.
- Trusted by others
As a CFO is able to conduct rigorous analysis and develop strategic roadmaps, ultimately they would still need to work with various other departments to realize the vision. In order to be able to effectively implement one’s plans, CFOs need to have a healthy working relationship with the rest of the firm, especially the CEO. By being able to influence the CEO, CFOs can help to guide decision making grounded on financial data and minimize errors.
Being the CFO of a company is not a simple task. The professional who wants to achieve this position needs to be aware that the journey is long, and he/she will need to earn their title by being not only technically capable, but a well respected communicator and influencer within the company.
In face of new expectations of the finance department, CFOs need not shoulder all the burden themselves. By dedicating time and effort in developing their team, CFOs are positioned to push the finance function into the spotlight. The best CFOs would surround themselves with the best talent, having the right balance of technical and analytical skills.
Do you want to find a suitable CFO candidate for your company? Use Shortlyst’s sourcing tool for recruiters today! Get your free access to Shortlyst’s talent acquisition platform