There is a common misconception about a company’s accounting and finance staff, jokingly referred to as “bean counters.” Perhaps it is a case of the company CFO with a purview that is limited to the numbers. But calling a CFO a bean counter does not allow for a full appreciation of the role and its potential.
In reality, the CFO is one of the key senior executives in any private company and can be vital to an organization’s long-term success. Here are five characteristics all great CFOs possess:
1. Great CFOs maintain a healthy tension with sales and operations.
When CEOs think of building the business, sales and operations usually come first since they are in the value chain, directly related to the customer value proposition. The best CFOs support sales and operations equally and have a significant voice in the debate over planning, since neither department consists of financial professionals but both have a significant effect on the company’s finances.
It is a delicate equilibrium. The CFO can be a strong voice in counterbalancing the salespeople—who tend to focus primarily on the top line—and operations, whose sole purpose is to ensure there is enough product or capacity to meet all the needs of sales, whether or not those needs make financial sense. A good CFO supports the efforts of both departments and is vocal in providing balance to decision-making.
2. Great CFOs get out from behind the desk.
Accounting and finance professionals tend to be inwardly focused and without much effort can spend all day at their desks with their heads down. It is certainly easy to do that with the vast amount of data and reporting to be managed. However, the best CFOs get out of their offices and are visible in the operation of the business, building relationships, supporting others, and learning the details of how the business makes money. They may be participating in or leading committees and work groups that are not part of accounting. They are usually strong participants in the company’s strategic planning activities and are not just providing the numbers. These pursuits that fall outside the traditional role of accounting increase the CFO’s visibility and understanding of what goes on in the business, allowing for a much more effective role in understanding and influencing company results.
3. Great CFOs understand their role in managing risk.
Many accounting professionals are risk averse by nature. Certainly the field of accounting is built on very conservative principles. However, there is a difference between avoiding risk and managing risk. The best CFOs are able to evaluate risk based on relative returns and understand that prudent risk-taking is the only way to grow a business. If the business owner brings opportunities to the CFO and always hears “No, it is too risky,” the owner will eventually stop asking the CFO for input. The only way businesses grow is to risk capital for a future reward. Great CFOs have the business acumen to look at the big picture in evaluating risk and returns.
4. Great CFOs move up the information value chain.
All accounting activities begin with events or transactions that become data. The accounting department turns that data into usable information in the form of reporting. Further analysis of the reports provides knowledge about the behavior and performance of the business. Such knowledge is key to making informed decisions about the business.
The typical domain of accounting is in the handling of transactions, data, and reports. However, too many CFOs view their roles as ending there and leave the bigger decisions to someone else. Great CFOs spend the majority of their time learning and understanding the larger domain of the business and decisions that follow, adding substantially more value to the business.
5. Great CFOs look through the windshield, not the rearview mirror.
At its most basic level, accounting is about recording the events of the past. Financial professionals attain significant talents and skills over the course of their careers due to a great deal of education, training, and experience. However, many limit their potential by defining their roles too narrowly, simply as recorders of history.
A timely, efficient, and accurate accounting system is critically important. However, the best CFOs make sure the numbers, controls, and reporting are all locked down by taking a leadership role in hiring and developing people, and implementing systems and procedures to ensure accurate and timely accounting information. They do not allow themselves to get down into the “weeds” of the day-to-day accounting; they stay focused on the big picture. They attend to the future of the business and think strategically about the company’s future growth and prosperity.