The chief financial officer (CFO) is an executive role that oversees or executes cash flow and financial planning, among a myriad of other financial efforts within an organization. While a CFO of the future has multiple duties, it is imperative to the company’s health that the person within this role reports accurate and up-to-date figures.
While the role of CFO arrived during the early 1960s, it’s clear there is incredible value in position and therefore isn’t going away anytime soon. There are noticeable trends within the role’s evolution, enforcing the importance of understanding the nuances of expectations in decades past.
The Traditional CFO
In the past, the CFO role was very technical and somewhat isolated from the rest of the company. The path of becoming a CFO typically began with an accounting or finance background. Typically, requirements would include an MBA, MFA, CFA, or experience as a CPA. From there, it would have required working up the corporate structure and serving long periods at the desk. This numbers-only role required the chief financial officer to manage financial planning, risks, and reporting, along with record keeping. Likely, they would report directly to the CEO but may have assisted the chief operating officer (COO) with matters relating to the company’s budget.
However, there has been an increasing amount of pressure put on the CFO due to a competitive and continuously changing business world. Just a few examples of these pressures include new technologies, globalization, emerging markets, and business models – all that affect how to reach customers and win deals. Amid streams of corporate scandals and continued backlash from the Great Recession, these instances have caused the role of the CFO to evolve, requiring a brand new set of skills.
Evolution of the CFO
The CFO role has continued to change, especially in the last few years. More and more companies want to add broader skill sets and leadership abilities to their management teams and are looking to future CFOs to help. As the financial gatekeeper at the company, they are being asked to evolve and expand whether they have been in this C-suite level role for years or are newly appointed. Meaning any aspiring CFO should expect to add some new tools to their belt to get the job done right.
It is imperative to have the unmatched financial expertise to rise to the executive level within an organization as a CFO. This expertise can aid in the company’s success in sales, technology, marketing, and operations.
Depending on the breadth of the business, the CFO may also be required to oversee particular functions that generally may have landed outside of their scope. Such duties include IT and legal. Therefore, the expansion of the role requires the CFO to be financially savvy, but it also means they will need to tap into their operational and visionary sides as well. More on that to come.
Why a Business Needs a CFO
Naturally, a valid question is why a business needs this kind of role. Well, bringing on a CFO at the right time can elevate a business’ profits and, ultimately, its success. As they champion the most up-to-date financial information for the company, they are an incredibly powerful asset to have on any team. By having the most accurate information at the right moment, a decision-maker can feel confident in making better business decisions. These choices include investment type decisions around such things as increasing staff, budgets, acquisitions, or even purchase or leasing of new equipment.
There is an incredible value of having a CFO who truly understands the ins and outs of the business. It is with this depth of knowledge that they can make a difference and hopefully enact positive change and growth within the company.
Finding the Modern CFO
The importance and breadth of the CFO’s role continues to grow, shaping a future CFO looks very different from that of years past. Meaning, the Chief Financial Officer [of the Future] will need a wide range of skills and capabilities to prepare for the opportunities and challenges ahead. Whether you are a current CFO or a future finance leader, continuing your personal and professional development will be critical for success.
Most importantly, you don’t need to let go of your current CFO to attain the CFO of the future. If they are willing and eager to learn the tools required to take your business into the future, then train them. However, if your company has yet to hire a CFO or has been looking to replace the current employee, then be sure to look for these qualifications in your applicants:
- Broad business knowledge
- Operational experience
- Leadership qualities
- Strategic mindset
- Strong communication skills…and all the traits mentioned earlier!
Remember, for a CFO to be successful in the future, they will need to be a leader in a workplace that is continuously changing. They must be more than “the finance guy,” “the numbers gal,” or “the Excel wizard.” As technology grows and cybersecurity becomes more of a threat, the CFO must be adaptable and utilize the technologies that will help their company to grow. If the company’s CFO can understand that communication will get them farther than keeping their nose in the books, you may have a modern CFO on your team.
If your company is searching for a CFO, Signature Analytics can provide part-time CFO’s of the future at a fraction of the cost of hiring a full-time CFO. Not only is this a budget-friendly option for any company, but a part-time CFO can help to refine policies and procedures, and even implement better tech tools for the accounting department to utilize. To find out more about our fractional modern CFO services contact us today.