The role of the CFO is constantly evolving. Possibly the most drastic transformation has occurred within the past 15 years. The introduction of the cloud, big data and digital currencies have contributed to a new era of financial management, processes and technologies. It is the responsibility of the CFO to guide organizations through this new phase. What does this mean for the CFO? What skills and competencies do CFOs now need to learn and develop to be able to navigate these untested conditions?
Gone are the days of CFOs crunching numbers in an office all day, focusing solely on a balance sheet. Today’s CFO is nimble, tech-savvy and proactive rather than reactive when it comes to the ever-changing business landscape. Here are five skills that existing and aspiring CFOs will need to develop if they want to be successful in the coming years.
Data-Driven and Analytical
Traditionally, the CFO’s role was very transactional. This is rapidly changing due to the huge amounts of data being collected. The modern CFO has an analytical mind-set and is leveraging the information that is being collected to generate more accurate, faster and more complete strategic plans. The mass amounts of data being collected by organizations also allows finance departments to understand and control costs as well as removing inefficiencies in existing processes.
A poll that was published on CFO.com found that 90% of senior finance executives felt that they needed to do more with their financial and operations data in order to make better strategic decisions. Being analytical means that a CFO can become a true business partner and provide valuable financial insights. It is not enough to simply report on performance at regular intervals anymore.
Big-data is not limited to finance. There’s so much data being collected from non-financial sources that can provide compelling insights and visibility. Corporate intelligence including customer satisfaction surveys, web analytics and buying habits now enable CFOs to make proactive decisions and recommendations to senior leadership.
Risk comes from many different sources in the life of a modern CFO; competitors, technology, buying behaviors and even political factors. As an organization grows this can cause major headaches for the CFO as a lot more is expected of them. The CFO is expected to combat these risks by strengthening the company’s business model along with senior leadership.
For example, online & e-commerce payments posed a major risk for CFOs. Within the past 5 years where e-commerce became widely used, CFOs needed to acquire the skills required to manage this exploding area of the business.
Technology is embedded in the DNA of a modern CFO. New technologies are enabling improvement and innovation across all areas of the organization. It’s important for CFOs to leverage technology to find innovative ways to improve working capital, ROI, payback periods and other measures.
Along with technology comes a new mind-set for CFOs. Traditional, linear thinking in today’s world stifles innovation whereas a more modern mind-set enables innovation. CFOs are now leveraging artificial intelligence (AI) tools to translate information into actionable business guidance. These tools are connecting things that were once too complex to connect and drawing new and actionable insights.
The CFO is a key member of the senior leadership team within an organization. In addition, a CFO needs to be an organizational leader who develops relationships inside and outside the business to provide a strong network of support professionals. Relationships need to be managed with people down, across and above within an organization.
Technical and analytical skills can provide great insights for the business but it is equally important for CFOs to be able to communicate the information in a way that will influence people and lead change. As a finance professional moves up within a company they have to develop their ‘people skills’ to communicate with senior leadership as well as other departments.
As business models are continuously adapting, it is the role of the CFO to adapt their plan to finance the evolution and be very dynamic during growth. A report by KPMG revealed that one out of three CEOs say experience with transformation is one of the most important attributes for a CFO.
Accounts payable (AP) and accounts receivable (AR) processes are two areas that have been able to evolve due to digitalization. Research by PayStream Advisors revealed the average cost of manually processing an invoice can be as high as $20, versus $4 for automated invoice processing. Aside from the financial savings, digitalizing AP and AR processes will increase productivity, save the time of business approvers/senior management, reduce duplicate payments and earn early payment discounts.
As we progress through the digital age, the role of the CFO is shifting. No individual or organization can avoid the digital disruption so it’s time to seize the opportunity. The CFOs of 2020 will be digitally-driven, analytical, adaptable and comfortable managing relationships with people both internally and externally.