The evolving roles played by those in upper management are the ongoing subject of widespread discussion and debate. The nature of the roles these executives play within their organisations has changed over time, just as the ways of doing business have changed. For the more specific player in this field, we might ask today, what exactly is a modern CFO?
One thing is for sure, today’s CFO is not the detached, risk-averse ‘numbers man’ of years gone by.
He or she will be someone who prioritises their investment in a deep understanding of all facets of your business – its mission and goals, operational and organisational structure, risk appetite, and importantly, its potential from a financial perspective.
Often, unfortunately, those in this role will oversee the generation of a variety of reports or data, and not analyse them, something that can be exacerbated (rather than aided!) by the number and variety of accounting and reporting software systems on the market today. Business owners may have a huge amount of data at their fingertips, but lack the time – or ability – to collate it, or make any significant use of it.
It’s vital that a CFO adds value by establishing a working rhythm for the business, and delivers results. This begins with smart accountancy, sure, but if – and when – they are successful, the role becomes that of a partnership with management, a ‘partner in finance’, working sympathetically with CEOs and COOs to improve outcomes for the business as a whole.
So how do you, as a business owner, know what your CFO should be doing? And how does their role impact and affect your business?
How does a CFO become your strategic business partner?
Outsourcing the functions of a CFO allows a business access to financial expertise and quality financial services, receiving the benefits of that skill set without incurring the huge costs associated with CFOs (and their six-figured salaries).
Knowing who the right outsourced CFO is should be governed by a CEO’s ability to operate by four key principles; which we call the ‘Four i’s’ of finance. These principles, when applied to a company’s financial management, can inform just how well an outsourced CFO will get the job done.
The ‘Four i’s’: Information. Insights. Ideas. Initiatives.
Information. A good CFO knows how to use a variety of communication styles, depending on who they’re communicating with. High performing CFOs will say that open, sincere, and frequent communication is of paramount importance when building transparency and trust, and displaying leadership. They will ensure the leadership team receive accurate and timely reporting, while ensuring your financial statements and other critical financial documents are correct.
Insights. He or she will be able tailor a strategy and business plan unique to the company’s objectives. They’ll focus on current performance needs, long-term strategic planning and guidance, and appetite for risk, with solutions offered specifically for driving your business forward.
Ideas. They’ll play a vital role in how your business’ direction is formed, and then plays out. They’ll question conventional thinking and make sure that your business looks forward to – and has the capacity to – rise to the challenges found in any area undergoing continuous improvement. Theirs is a fresh, objective, and honest view of your company’s financial status.
Initiatives. This kind of thinking is highly sought-after in business, especially when the ideas, once executed, will generate an improvement – in results and revenue. A CFO’s willingness to investigate new initiatives will see the business update their activities and reduce expenses, resulting in a positive knock-on effect throughout the whole company.
A forward thinking, clear, modern and progressive approach to a CFO’s role within an organisation is a rare commodity, so it is not without precedent that its functions might be best served through an outsourcing model. Bringing new blood into a senior executive role can result in consolidation and growth, and an outsourced CFO will have these tools at their disposal without the accumulated ‘baggage’ of an entrenched company culture.
Outsourcing your CFO’s function may be the key to improving a company’s bottom line, all the while reaping the benefits from not having an in-house executive doing all the financial heavy lifting.