When it comes to working with Chief Financial Officers, conventional wisdom puts them squarely in a ‘looking after the numbers’ box. After all, CFOs are all about data: quarterly performances, operating budgets, and the like, right?
Perhaps in the past – now, more and more companies are looking to CFOs as a key part of their management team, as they have quite a bit of valuable information to share that goes beyond just profit and loss.
Financial Downturn Created New Trends
When the financial crisis hit, many businesses looked to their CFOs to take on expanded roles. Businesses struggling to survive needed their finance departments to help assess the overall health of the brand.
Instead of just reporting on the numbers behind strategic decisions, many CFOs and budget managers were tasked with actually implementing strategies as well. They were also required to provide insights into the strategic planning and decision making processes of the business.
It shouldn’t come as a surprise then that as the economic situation improved, CFOs remained as an important part of the overall management team and thus more deeply involved with strategic decisions.
The execution and implementation of key decisions and strategies by CFOs have become so vital I’ve seen two interesting trends. First, some businesses they are appointing people outside of traditional finance tracks to the role of CFO. And second, a number of Chief Executives are moving into that role from the CFO position.
These factors go to show how important the position has become. There are a number of reasons why I think this trend will continue over the coming years.
One major area where the skills of a CFO can stand above the rest is the ability to combine planning and reporting functions synergistically.
By having a deep understanding of past numbers and reporting coupled with the ability to plan for the future using what if scenarios and forecasting, CFOs can produce one uniform set of data from which every stakeholder can make decisions. More importantly, CFOs have the ability to take this complex financial information and break it down into key terms and pieces of information.
Additionally, with advanced budgeting technology, specific reports can be generated. These reports can track key performance indicators, highlight expected versus actual data, and give up to the minute projections on goals.
Another key role for CFOs now is heavy involvement with decision making. Finance departments are being used in new ways, such as collecting information and data from across the business, including other departments.
They can then use this data to assess potential risks, highlight expenses that can be negotiated, and estimate the impact of new hires, just to name a few. This allows for all stakeholders to be informed not only with past data but future projections and forecasts, crucial information when it comes to decision making.
These key stakeholders and decision makers will see how potential decisions might affect everything from cash flow to quarterly earnings and yearly sales. Having more information, with the CFO involved in the budgeting, planning, forecasting, and reporting process to break down the data, can help the management team make decisions more quickly and efficiently.
One area where CFOs and the finance department are often forgotten about is when goals and strategies need to be executed. However, the finance department and the CFO can become a key ally in not only goal execution but overall process improvement.
They can do this by turning to data. Here, once again, having software that can pull in data from across departments and locations makes a difference. CFOs can use reporting and data to easily assess and highlight potential project risks, thus reducing the rate of failure in execution of business goals.
These are only a handful of the reasons why I think we’ll continue to see CFOs becoming a more valuable member of company’s decision making teams over the coming years. Today’s CFOs are armed with the tools and resources to become true strategic partners when it comes to running a business efficiently and effectively over the long term.
Register for Our Free Webinar for CFOs
If you are a CFO who is looking to become more involved in the strategic planning process, we’ll be hosting a live webinar this week: The CFO Playbook on Planning: Best Practices for Creating a Forward-Looking FP&A Function. In it, you’ll learn how companies are enabling CFOs both within the finance department and across the organization as a whole. Click the link to register.
Businesses of every description rely on the Budget Maestro™ family of software solutions by Centage Corporation to improve the efficiency and effectiveness of their business budgeting and planning, financial forecasting, financial consolidation and reporting processes. For more information, take a tour of Budget Maestro, contact Centage, or call 800-366-5111 now.