Why Your Business Needs A Strategic CFO
The career track of CFOs often takes them through the roles of accountant and analyst; then to controller, finance manager or treasurer. They earn well-deserved reputations for being diligent expense watchdogs, budget analyzers and cash managers; but it is a significant transition moving from controller, FP&A director or treasurer to the CFO role. This is especially true today, when nearly all CFOs are expected to play a large strategic role at their company.
The role of the accounting and finance department is traditionally one of limiting expenses, which is necessary when expenditures are contemplated on low-return items, but if you limit expenses, by definition you limit growth. In that capacity, accounting and finance departments are sometimes seen, unfairly, as wary of growth.
Strategic CFOs can shift their mindset to the opportunities that come with strategic expenditures. One of the biggest challenges CFOs face as their company grows is moving from a role of limiting activities and curbing expenses to one of managing growth. The AFT Assessment TM is a simple tool you can use to quickly assess your Four Pillars of CFO success and growth capabilities for your team.
Strategic CFOs must, of course, still ensure the company is not making financial mistakes, but they also have to look for opportunities. There is great value to being open-minded as you face the unknown while still exploring business opportunities in a structured way.
In fact, because they have access to all the company’s moving parts ,CFOs are uniquely placed to help the company take intelligent risks. Everything comes through finance, including revenues, cost of goods, expenses, investments and capital.
CFOs also have the best resources at their disposal to uncover and analyze detailed, financial information and examine business proposals. In this respect, they have a huge advantage over everyone else in the company, including the CEO.
This knowledge grants them a special responsibility. They are in the best position to see how a proposed investment would fit into the company overall, giving them the perfect opportunity to be business builders and growth managers. Additionally, they should welcome creative ideas from all parts of the company and help make those ideas fit into the company’s overall financial strategy and long-term business plan.
A Strategic CFO has to be a partner to the CEO, providing expert financial counseling that converts the CEO’s ideas into reality. CFOs should utilize their broad knowledge of the company and its strategic objectives to drive ongoing business and new activities in a financially sound direction.
For instance, a CFO can play a key role in assessing a facility expansion, which requires financial analysis, a capital raise, project planning and construction management. Strategic CFOs can use their analytical ability to champion the expansion in a way that makes sense to a board of directors, lenders and outside vendors. Though the proposal may not show a substantial financial return initially, CFOs can use their experience and knowledge of the company to look beyond the short term. They can demonstrate the long-term value of an investment to the company’s growth strategy.
Strategic CFOs are growing in demand. Seventy-one percent of CFOs contacted for a report said their job has gained strategic influence in the past three years. Of the 930 global CFOs surveyed for the study, released by Accenture and Oracle, 65 percent said they had an increasing responsibility for setting and determining strategy. Almost half said their role in business transformation efforts had increased.
CFOs are going well beyond the balance sheet to strengthen their companies by playing a strategic role in managing growth.
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