A good CFO no longer concentrates solely on finance and accounting functions.
Today’s successful CFOs have a broad background of experience that goes well beyond accounting and finance. In fact, these days, CFOs are tasked with being the lead on IT and digital transformation initiatives, enterprise transformation, and even environmental, social and corporate governance. This is in addition to traditional CFO duties like investor relations, risk management, mergers & acquisitions and corporate strategy.
Let’s break down what a CFO is responsible for, what the qualities of a good CFO are, and how you can get started with CFO services.
What does a CFO do?
The CFO uses past results from accounting to develop strategic, forward-looking, and long-term forecasts, plans, and investment recommendations. A modern CFO is expected to be the main communicator of the business’ financial health and strategy to both internal and external audiences (including Board of Directors and investors). Here’s what this can look like:
- Guarantor of Financial Integrity: This is table stakes today. CFOs need a robust background in accounting and finance, preferably across multiple industries and sizes of organizations to be able to implement best practices gleaned from a variety of experiences.
- Chief Communicator of Business Financial Health: The CFO, more than the CEO, owns internal and external communication of the business’ financial health and strategy. This includes employees, board of directors, investors, stock analysts, bankers, audit firms, and more.
- C Suite Partner: It’s been said that the best CFOs are the right hand of the CEO and a reliable partner with the rest of the management team. The CFO is the position that has the broadest view of the organization behind the CEO and, as such, they are leaders who can work well with the management team to strategize the best path to the organization’s goals.
- Operations Involvement: A deep understanding of the business is essential. A business’ financials are simply a reflection of its people, their decisions, behaviors, processes, and systems. Understanding the broad scope of these factors, identifying the root cause, and assessing its impact on the top and bottom lines is essential for any good CFO.
- Digitalization and Technological Innovation Champion: Increasingly, the CFO is tasked with technology transformation – whether it be production automation, data analytics, or artificial intelligence. A good CFO has enough technological experience and interest to be able to successfully lead these projects.
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What are qualities of a good CFO?
A good CFO is a CEO in training. This is because the CFO role has expanded in scope, and it now requires attributes and expertise beyond accounting and finance. This is also true because, as the CEO’s closest senior management ally, the CFO is exposed to broader portions of the business. In the process, the CFO gains the experience necessary to polish their strategic, forward-looking ability to create value.
To be successful, today’s CFOs need to have the following qualities:
- Analytical and Strategic: Good CFOs can look at numbers and ratios and quickly assess opportunities to drive value creation in the short and long terms.
- Operationally Savvy: Knowing how the organization provides value to customers and makes money is grounded in a deep understanding of the business.
- Emotionally Intelligent: Understanding how to “read the room” and how each constituent of the CFO likes to engage is paramount to a CFO achieving collaboration and successful engagements that help achieve business goals.
- Good Communicator: A good CFO needs to be able to tell the story of the numbers and, in the case of internal communications, how each person’s actions impact those numbers – thereby creating engagement and alignment on behavior change.
- Technology Fluent: CFOs increasingly manage the IT and digital transformation initiatives of the organization. While the CFO doesn’t have to possess an MIT PhD, they do need to be comfortable with and interested in implementing technology that can drive efficiency and value for the organization.
- Resiliency: The CFO role will continue to evolve, and demands on the position will only increase. Therefore, it’s imperative that any CFO has a flexible and resilient mindset and be able to work well under pressure.
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Interested in learning more about the role of a good CFO?
At New Life CFO, we provide fractional CFO services for businesses of all shapes and sizes, and we’d love to help you, too. If you’d like to learn more about how to get started with fractional CFO services, give us a call, reach out to us online for a free consultation, or check out our additional CFO resources.