How the Role of the CFO has Evolved Over the Past few Years

Posted on:  January 6, 2023

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Traditionally the CFO was entrusted with the responsibility of planning, implementing and monitoring all the financial activities of a company. CFOs were expected to play a pivotal role in ensuring regulatory compliance. The CFO was responsible for analyzing the company’s financial strengths and weaknesses, along with proposing strategic decisions.

The Modern CFO Wears Many Hats

The CFO’s role has evolved dramatically during the past few decades. The core responsibilities of the CFO haven’t changed. The new CFO is still responsible for analyzing cash flow and financial statements. But they now need to do much more than just analyze key financial processes to stay relevant. The new CFO works with the CEO and CTO to improve overall business efficiency.

The modern CFO is a smart number cruncher and a leader who weighs in on different decisions ranging from talent management to IT security. The modern CFO has a say in different matters and plays an active role in developing customer experience management, crisis management, attrition control strategies, and technology evaluation methods. They work with the C-level executives to ensure business continuity.

The New CFO is a Technologist

The modern CFO plays a vital role in driving technological adaptation and innovation. During coronavirus lockdown, CFOs around the world worked with CTOs to chalk out and implement digital workplace strategies. CFOs today focus on and accelerate transformation within the finance function. They spearhead automation initiatives and develop ways to improve workplace digital literacy.

The new CFO understands the importance of digital transformation. They oversee the adoption and implementation of new financial management software and technologies designed to deliver real-time data insights and updates. The modern CFO possesses a deep understanding of technology tools and platforms such as cloud-hosted ERPs. They are expected to examine the ways competitors are using technological innovations, research different financial business planning and analysis software, and choose the best one for their business.

The modern CFO is aware of the tools available at their disposal. They leverage different tools and technologies to align strategy, planning, and risk. Big Data provides valuable insights into business operations and customer behavior. It is imperative that CFOs embrace Big Data or they may run the risk of being left behind. The new CFO should also be able to make heads and tails of business data. They play a key role in influencing and shaping business strategies through data-driven decision making.

A Strategic Decision-Making Partner to the CEO

The new CFO works closely with the CEO to drive the business in the right direction. As discussed above, the modern CFO has access to advanced tools and technologies. They use these tools to unearth insights and leverage them to help the CEO identify investment opportunities and develop a growth strategy. They also warn the CEO about business risks revealed by data analysis.

The new CFO, along with the chief human resource officer or CHRO, analyzes key human capital indicators that drive business growth. Typical examples include employee engagement, retention, training, and employee productivity.

Leads an Evolving Finance Department as an Agent of Change

Change is inevitable, and also scary, which is why people resist it. The new CFO plays an important role in devising strategies to help employees accept change. They work closely with the HR team to craft employee education programs and other initiatives to explain to employees how new technology can contribute to business growth.

The new CFO continuously evaluates the finance function and makes necessary changes, which may involve removing or tweaking inefficient processes or adding new, more efficient processes. They eliminate bottlenecks within the finance department. The new CFO also makes important decisions such as whether to outsource the accounting or bookkeeping process.

Skills Every Modern CFO Needs

The new CFO should possess effective leadership and communication skills. They should be able to lead group-wide transformation programs. It is imperative that the new CFO knows how to get their point across the right way. They should invest time in building a successful and effective finance team. The new CFO should set clear short-term and long-term goals for their team, along with creating the necessary plans to achieve them.

The modern CFO should possess a deep understanding of the company’s business model and industry. They should have analytical skills that enable them to accurately predict the financial consequences of business decisions. An effective CFO is able to navigate complex data and create predictive scenarios that pave the way for better decision making. The CFO should have the skills required to identify opportunities for top-line growth. They should be able to perform product line and regional profitability analysis and benchmark against industry peers.

Violations of regulatory compliance can leave a business exposed to legal risks. The modern CFO should perform a comprehensive risk assessment, come up with a plan and implement it to ensure legal compliance. They should also maintain a strong internal controls environment and an effective financial reporting process to minimize business risk.

The modern CFO should possess advanced financial and technological skills. They should know how to use predictive modeling to analyze macroeconomic trends.

The Role of CFO Will Continue to Evolve

Many experts believe that the CEO and COO roles will become interchangeable in the future. The coming years will present new challenges in the form of changes in capital structures, increasing competition, social and political changes and increasing government regulation. CFOs who understand tax codes, have financial planning skills and the skills required to manage risks and business transformation will have the edge on the professionals with just finance skills.

Synoptix Software is committed to helping CFOs make data-driven decisions. Our financial planning software is designed to help decision makers pull insights from raw data and analyze it easily, without having to rely on an IT department. To schedule a product demo with one of our experts, call 866.214.6008.

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