I remember the first time I told my father I was going to major in accounting. He looked at me and asked, “You want to be a bean counter?” Fair or not, that’s the perception of many outsiders, and the perception that many CFOs must fight hard to overcome. However, the reality is that a CFO can add tremendous value by proactively supporting other departments, managing risk, implementing new processes and technologies, and serving as a liaison to external stakeholders. Following are some of the characteristics we see in the highest-performing CFOs.
- They proactively look for opportunities to support other functions. Outstanding CFOs make a point of spending time with functions such as sales and operations to ensure that those departments have the information they need to drive growth and reduce costs. They also make sure that they safeguard assets but don’t mire other departments in red tape.
- They identify risks before those risks impact the business. A strong CFO never forgets that the next crisis is always right around the corner. Many of the most common threats—recession, customer concentration, deteriorating credit quality, supplier shortages, or spikes in the cost of labor or materials—are fairly easy to identify and quantify. By proactively understanding the potential impact of these threats and developing mitigating responses, the best CFOs ensure that their companies are well-positioned to thrive even in the most difficult times.
- They leverage new technologies. Traditional accounting and finance departments are going to find themselves under attack over the next five to 10 years. Forward-thinking CFOs are already considering how to decrease costs through robotic process automation and artificial intelligence. They plan to use these cost savings to reinvest in the skills necessary for success in the future, such as data science. By doing so, they will be able to provide more timely, accurate, and actionable data to other executives in the organization.
- They develop processes and information systems that lead to insights. Information in basic financial statements is often of little use to management. However, real-time information that’s typically held hostage in financial systems can help management teams identify and rapidly respond to emerging trends. The CFO is not only the gatekeeper of this information, but also leads the function that is most qualified to analyze and interpret it. The best CFOs take time to understand the leading indicators in their businesses or industries, map those indicators to their information systems, and determine how they can leverage real-time data to inform their decision-making processes.
- They build strong relationships with capital providers. It doesn’t matter how well a company is positioned if the CFO can’t build trust with capital providers. To do that, the CFO must:
- have a full command of the company’s strategy;
- develop relationships before the company needs capital;
- clearly articulate the company’s vision and objectives;
- develop realistic forecasts;
- provide honest, transparent perspectives about performance; and,
- proactively address challenges or obstacles.
By doing all of these things, great CFOs build the trust necessary to ensure that the company has access to the resources it needs to execute its plans.
By focusing on these five best practices, CFOs can build constructive internal and external relationships, fortify the company against potential threats, and maximize company profits and shareholder value.
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