When one considers the way we approach business today, compared to a decade ago, we come to realise that there has been a significant shift in our areas of commercial attention. Today, more than ever, we place significant focus on customer value creation, process automation, commercial risks, cloud technology and people accountability.
Given this shift of focus towards those activities that generate “true” growth, the skills and demands on Chief Financial Officers (CFOs) have been placed under the microscope. Whereas CFOs have always been considered the financial gatekeepers of organisations, as still applies today, the role of the modern day CFO has new demands that require clarification.
A modern day CFO clearly understands that a results based approach far outweighs the burden of being overly task-based. The modern CFO realises that:
- Strategy and risk go hand-in-hand and are not mutually exclusive.
- Risk mitigation ensures that executive decisions must not be made without considering and measuring risk.
- It’s about the future… where are we going and how do we plan to get there.
- Business and financial modelling are intrinsically linked.
- Multiple scenario analysis is a catalyst for decision making.
- Only three-way financial forecasts show the full financial picture.
- Financial reports need to be user-friendly for decision making- if the audience wants visuals and ratios. Give it!
- Calculating future business value is an untapped reporting gem.
- Many businesses do not have the right measures.
- Business measures should be reset quarterly as is relevant for quarterly goals.
- Measures should not only be financial, but also include the customer, processes and organisational capacity.
- Departmental and staff measures drives people accountability.
- If financial staff do not have a direct effect on the bottom line… outsource!
- The 80/20 rule in terms of activity and money applies more towards CFOs than any other business resource/employee. Map it out!
- That strategic goals can only be achieved if they are clearly cascaded down throughout a growing organisation.
- Collaboration and results are the goal, not tasks.
- Intangible business assets create more long term value than tangible assets… just ask any venture capitalist or private equity firm.
The modern day CFO understands the pains and challenges associated with fast growth and is a fantastic facilitator in providing the solutions and support for the effective implementation of business strategies. By “connecting the dots” between strategic objectives and their desired outcomes, a modern day CFO gets results!
Alan Sharfman is a CFO consultant and strategic corporate advisers.
This article appeared here first.
