5 Steps to Transform into a Modern Day CFO

As the finance team evolves, the role of a CFO is also changing. A modern CFO is not limited to the financial aspects of a company. The expectations have increased beyond the finance and legal functions.

Earlier CFOs focused on the bottom line and not much on the business growth. It was mainly managed by other strategic units. Now, the CFO leads the portfolio to drive IT investment and other critical decisions to grow the business and prepare it for the future. Before we delve deeper, let’s look at how the role of a traditional CFO has evolved.

Role of a traditional CFO

The primary responsibility of the traditional CFO is to manage the financial risks of the organization and grow profits. Traditionally, a CFO is viewed as a financial gatekeeper.

The CFO is responsible for financial stewardship, record-keeping, and financial planning. They supervise the finance operations and ensure that assets are preserved and risks minimized.

Expectations from a modern CFO

Over the last decade, the CFO’s role has shifted from number-crunching to co-driver of corporate strategy focusing on long-term growth strategies. These strategies are closely linked to Environmental, Social, and Governance (ESG) issues.

Today’s CFOs use financial data and contribute to operational decision-making. They are considered as a catalyst for business transformation. CFOs are also responsible for the management, measurement, and reporting of sustainability efforts.

CFOs play a vital role in building the overall business strategy and integrating financial and non-financial performance dimensions into decision-making.

The modern CFO is a partner to the CEO and an early adopter of technology to automate mundane tasks. The CFO is a strategic advisor, consultant, and leader for business growth.

A survey by Accenture suggests that about 88% of CFOs have introduced new metrics to optimize financial resources and make a positive impact on the business.

How to transform into a modern-day CFO?

1. Leverage latest tools and technologies

CFOs are now the stewards of new technology to unlock efficiencies and enhance agility. Modern CFOs understand the latest technologies and are ready to invest in them. They are not a naysayer of technology anymore. This helps businesses to become competitive and future-ready.

The smart CFO understands the importance of disruptive technology to lead the growth story of business, overcome hurdles, and serve stakeholders better. As technologies such as artificial intelligence, automation, IoT, blockchain, and machine learning are impacting business decisions, CFOs have learned to unlock their full potential.

2. Critical problem-solving skills

Leadership teams depend on accurate and real-time information to champion critical business decisions. By prioritizing and leveraging technology, CFOs can streamline data that guide those decisions.

A modern CFO is a multitasker who leverages technology to manage people productively, nurture stakeholder relationships, and optimize processes. By embracing new business processes, CFOs eliminate the adage of “we have always done it that way.”

With more interdepartmental knowledge and intuitive problem-solving skills, today’s CFOs encourage teams to realize the potential of doing things in new ways, for business growth and longevity.

3. Deep understanding of cash management

The core responsibility of the CFO is to manage the company’s capital, profits, and expenses. The CFO’s office also owns the statutory and regulatory requirements, audits, and other financial aspects. So, how does a modern CFO become strategic and encourage innovation?

A new-age CFO leverages technology to anticipate business outcomes, optimize resources, control costs, improve productivity, and plan the course of the business.

Today’s CFOs use innovative technology to overcome bottlenecks in cash flow, gain data insights, and keep the business funded. For example, a new-age CFO understands the importance of shifting from a manual accounts receivable process to an agile and automated process flow.

4. Move beyond financial reporting and forecasting

A modern-day CFO undoubtedly is at the heart of strategic and financial decision-making and resource planning. They understand the pain points of a business and continuously strive to change the status quo.

New-age CFOs no longer rely on historical financial reporting techniques for decision-making but use predictive models to drive growth. Modern CFOs also place a greater emphasis on non-financial KPIs, not limited to finance and accounting, to evaluate multiple aspects of the businesses. The role of the CFO today is more dynamic and not limited to financial reporting or planning. He or she actively participates in building the business strategy using analytical, risk management, and communication skills.

5. Ability to establish business or performance metrics

A CFO is adept at hitting the numbers and establishing processes to optimize operations, products, services, and stakeholders from a finance viewpoint. A high-performing CFO uses intuitive dashboards and key metrics to measure the company’s financial health, expenditure, cash flow, and resilience for unforeseen circumstances.

Digital intelligence helps CFOs track business operations metrics in real-time and engage with multiple teams to help them see the bigger picture. A modern CFO uses relevant business metrics to advise on and bring changes to workflows, perceptions, and business goals.

Next steps:

As businesses scale, the traditional CFOs will need to evolve into modern CFOs not only to manage funds but also to steer the business in the right direction. The five reasons we have given above is not an exhaustive list, but it will help kickstart the transformation journey towards a modern CFO.