The Strategic CFO: More Important Than Ever

When it comes to CFOs, conventional wisdom puts them squarely in a “looking after the numbers” box. After all, chief financial officers are all about data: quarterly performances, operating budgets, cash flow statements, etc.

Maybe in the past. But now, more companies look to their CFOs as a key part of the management team. The strategic CFO delivers valuable information that goes beyond just profit and loss, and looks forward to the future financial stability and profitability of the organization.

Financial downturn creates new trends

As financial crises hit, many businesses look to their CFOs to take on expanded roles. Businesses struggling to survive need 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 are now tasked with actually implementing strategies as well. They’re also required to provide insights into the strategic planning and decision-making processes of the business.

It shouldn't come as a surprise that as the economic situation has improved, CFOs have remained as an important part of the overall management team, and thus more deeply involved with strategic decisions.

Here are two interesting CFO trends from recent years to note:

• Some businesses are appointing people outside of traditional finance tracks to the role of CFO
• A number of CEOs are moving into that role from the CFO position

This goes to show how important the position has become. There are a number of reasons why we think this trend will continue over the coming years, and how to react if you’re in the office of the CFO already, aspiring to it, or working your way up to the chief executive role.

Reporting: How a great CFO separates from the pack

One major area where the skills of a CFO can stand above the rest is the ability to synergistically combine planning and reporting functions.

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 data to drive informed decision-making. With advanced budgeting software, specific reports can be generated to suit the unique needs of the organization. Financial dashboards track key performance indicators, highlight expected versus actual data, and give up to the minute projections on goals.

How a CFO enhances a company’s decision-making

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 other departments within the business. They  use this data to assess potential risks, highlight expenses that can be negotiated, and estimate the impact of new hires, among other scenarios they might model. This allows for all stakeholders to be informed not only with past data, but also detailed future projections and forecasts, crucial information when it comes time to make strategic decisions.

These key stakeholders and decision-makers will see how potential decisions might affect everything from cash flow to quarterly earnings and yearly sales. Armed with more information, an engaged CFO involved in the budgeting, planning, forecasting, and reporting process is able to break down the data, helping the management team make decisions more quickly and efficiently.

How the CFO executes strategic goals

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.

FP&A software that can pull in data from across departments and locations makes a difference. CFOs can use reporting and data analysis to easily assess and highlight potential project risks, reducing the rate of failure in the execution of business goals

CFOs will become an increasingly valuable member of the company's decision-making teams over the coming years. Today's most prepared CFOs are armed with the tools and resources to become true strategic partners for running a business efficiently and effectively over the long term.