The critical role of a forward-thinking CFO

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We were in a meeting with a CEO where they were describing the role of their controller, who essentially serves as the CFO of the company.

The CEO said this person reported on the key performance indicators (KPI’s) of the company. We asked, “Do they tell you what the KPIs should be?”

The CEO paused, thought a moment, then started writing notes frantically as our conversation continued; like in many organizations, that wasn’t the role their CFO was fulfilling, but it was the role the CEO needed fulfilled.

From reporter to strategist


Traditionally, the CFO is seen as the person who makes meaning from past performance. The translator of charts and graphs, who can help make sense of the past tense: This is what happened.

This is still an essential skill set, but today’s CFO has to also be able to answer the obvious follow-up question: So what? What happens next from that data? How does it meaningfully guide the future of the company?

This disconnect from what the CFO is known to do and what they should also be doing can be caused when leadership isn’t used to thinking of the CFO as a strategic partner — even when that strategic partner is what they need most.

They’ve always done things a particular way — asking the CFO to do certain things — and so both parties get familiar, if not comfortable, with that standard.

Again, these traditional skills are essential for the CFO.

Today, those skills must be augmented with thinking and frameworks that guide growth, strategy and direction for the future of the company.

A great CFO isn’t burdened by the idea “this is the way we’ve always done it.” They come in and look for ways to constructively create change.

A culture of complements and collaboration


There can be resistance to this kind of forward-thinking, especially if the CEO or other leadership is uncomfortable with change.

This is why communication is key: The CFO and CEO have to understand and agree on what needs to be done, why and who should be involved.

Fast-growing companies can struggle with this, especially when the same leadership team of, say three people, has seen the company go from five to 50 people over a few years.

What was “easier” — communication, decision-making, reporting and overall financials — with five employees is much more complex with 50, but the culture of decision-making might not keep up with the growth the company has experienced.

A company like that might not have valued a strategic financial thinker when they only had five employees, but they’ll suffer without that role filled as they grow.

 

Role of the CFO in creating impact


The strategic CFO can act as a relief valve to the CEO and leadership team because they’re uniquely equipped to deliver insight and foresight on what company financials mean in the present, and how those insights can create future growth for a company. 

The CEO can assume (or in some cases, resume) the role of visionary, confident in the support they’re getting from a CFO who delivers the guidance needed for clarity in that vision.

When is the right time to reconsider the CFO’s role?


For CEOs and leaders, it’s important to consider the pain points they’re facing in real time and what they’re missing — from a financial perspective — that could alleviate some of that pain.

This could simply be lack of confidence in reporting or in understanding what some reports mean. It could be in-the-moment issues like cash flow or profitability.

For some CEOs, it’s a sense of frustration that they’re spread too thin or doing too much.

These are all symptoms of larger issues that can usually be addressed and overcome, often quickly, in the hands of the right CFO.


 

https://www.youtube.com/watch?v=0lh9Ehb9UKg&feature=emb_logo
 

Author

  • PROCFO PARTNERS ARE EXPERT FINANCIAL OFFICERS, NETWORKED ACROSS INDUSTRIES, VERTICALS, SPECIALIZATIONS AND SITUATIONS.

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