As the role of most other corporate positions have changed and evolved with the passage of time and changing business environment, the CFO role has changed and evolved too. Traditionally, the CFO was considered as the ‘head bookkeeper’ of the organization, who was responsible for collation of data, preparation of reports and handing them over to the CEO. However, that is not the case anymore. The Chief Financial Officer (CFO) is now regarded to be almost as valuable as the Chief Executive Officer (CEO) of a company. The Chief Financial Officer dons many hats for the welfare of the company and plays a key role in the value creation process of the company.
Let us understand the emerging role of a CFO and his/her contributions to business in the present day environment.
EMERGING ROLE OF THE CFO
Due to the operational difficulties and for the purpose of equal distribution of workload, the CEO position was further divided into CFO and COO positions. The role of the CFO has evolved to meet the modern business requirements since then, as illustrated below:
- STRATEGIC ADVISOR: With the changing times, CFOs have evolved as strategic advisors for their organizations. A CFO is now an integral part of the organization’s strategy development and the monitoring of its execution. This is perhaps the biggest change from being the ‘head bookkeepers’ and ‘money crunchers’.
- LEADER: Effective leadership capabilities, technology savviness and exceptional communication skills are some of the key traits of a modern day CFO. They are ready to undertake ownership and often lead large, multi-cultural teams working across diverse geographic locations. They are able to depict complex information into simple, petite data that is well understood by the masses. CFOs are also responsible for laying the necessary organizational structure and place the right resources in the right places for F & A teams.
- IT & DATA MASTER:The new-age CFO must understand the evolution of technology, as it helps him/her to harness the potential of data for achieving larger organizational goals. Being well versed with data visualization tools help the CFO to present information in an easy to understand and impactful manner to the CEO/Board. IT advances can sometimes have a significant impact on the organization’s revenue and profitability too. The CFO also plays the most critical role in the decision to outsource the company’s F & A activities and identifying the right FAO partner for it, in which technology is one key consideration.
- OPERATIONS CHIEF: The present day CFO has substantial operational responsibilities including that of financial control. S/he must be well experienced to identify the necessity to strengthen the structure by providing expertise and unique perspective by bringing in new reforms. The reforms must be well implemented to improve the operations and the finances of the company. The CFOs, therefore, play a significant role in controlling the internal environment and providing substantial financial success to a company.
- FOCUS ON RESULTS, NOT EFFICIENCY
The finance function is now increasingly being assessed in terms of its effectiveness – its ability to deliver what the business needs – rather than a narrower focus on its efficiency. The CFO is responsible for ensuring that this expectation is met by his/her team on an ongoing basis.
THE CFO JOB DESCRIPTION SHOULD INCLUDE
- Providing leadership, direction and management of the finance and accounting team
- Providing strategic recommendations to the CEO/president and members of the executive management team
- Managing the processes for financial forecasting and budgets, and overseeing the preparation of all financial reporting
- Advising on long-term business and financial planning
- Establishing and developing relations with senior management and external partners and stakeholders; Responsible for Board and shareholders reporting
- Reviewing all formal finance, HR and IT related procedures
- Business Facilitator and Compliance
Over the past decade, we have observed drastic changes in the business landscape. And, correspondingly, the roles and responsibilities of the present day CFOs are no longer limited to financial accounting only. They are expected to play a leading role in strategy, communications and operations of a company, well beyond bookkeeping, compliance, budgets and reports, which continue to remain part of their agenda. To sum it up, today’s CFO plays the role of an ‘all-round catalyst’ in the organization.