The CFOs of today are key to optimized organizational performance
The current business and operating climate presents multiple challenges for CFOs and their teams but, also provide a great opportunity for ambitious CFOs to drive superlative organisational growth
Hanadi Khalife August 30, 2020
Hanadi Khalife is IMA’s Senior Director for Middle East and India operations.
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Whether it is in the midst of the coronavirus pandemic, global trade wars, geopolitical tensions, or simply the myriad complexities of business, we see CFOs across companies and sectors in the thick of action – either salvaging a difficult situation or strategically planning for long term growth and very often both. The CFO’s role was already changing before Covid struck, but with the pandemic, it has become even more critical to enterprise survival.
So, whether it is a decision to hold off on marketing spends, review business performance or seek foreign investments, strategic decisions are now predominantly being driven by the CFOs office while being front-ended by the CEO. A far cry from the earlier role of simply being a ‘table stakes job’ where the CFO and his team were simply expected to manage balance sheets, cash flow, working capital, etc. with little to no involvement in all the operational responsibilities which rested with others.
However, increasing economic volatility, fluctuating oil prices, turbulent currency markets, along with geopolitical shifts of power are some of the many challenges that CFOs face today. This, in turn, requires that they increase their partnership with the corner office to make sense of every situation and help them to navigate unchartered waters.
The CFO and his team are now expected to add value well beyond the traditional roles of cost management and controls through good governance practices. Whether they are operating in a large or small company, CFOs have increasingly expanded their involvement and contribution beyond finance and accounting operations and now have a much closer insight into operations, strategy, and even IT. The pandemic has helped accelerate the evolution of the role of the CFO to that of a trusted business advisor and strategic business partner.
There is now also a growing conversation about the impact of digital transformation on the finance and accounting profession and the rise of the “strategic CFO”. And, in the new normal of a post-Covid world, this conversation is expected to get even louder.
A new digital landscape led by automation is driving CFOs to see things differently. As the traditional accounting function gets taken over by software programs, much of the heavy lifting will be cannibalised by technology, leading CFOs and their teams to focus on the interpretation of the data, rather than the recording and reconciliation of it. This also means that CFOs will be taking on a more operational role and looking deeper at data around all facets of operations and in turn sharing insights with the CEO and the board to inform the next course of action.
The CFO’s role, therefore, is becoming more cross-functional, serving as the integration hub for key business processes; as a catalyst for change – including business transformation; and as a consultant or trusted business advisor in helping to create sustainable growth.
In the US, for example, the role of the CFO became significantly more important partly as a reaction to Sarbanes-Oxley. The sweeping 2002 law imposed reporting and audit controls on public companies to avoid the kind of accounting scandals that rocked Enron and WorldCom just a year earlier. India too has enhanced its regulatory compliance ecosystem considering the spate of insolvencies and financial irregularities that India Inc witnessed in the past few years.
The rules of the game have changed for CFOs in response to the increasingly uncertain, dynamic, and global economic environment in which businesses operate today.
Having to deal with a more dynamic external environment and increasingly complex organisational ecosystem is requiring CFOs and their teams to grapple with new sets of technologies that are digital in nature. Technology is no longer a stand-alone function, but one that is embedded in all aspects of the business.
Better tools that make use of data analysis, automation, AI and machine learning are becoming mainstream. Technology is evolving very quickly, providing the potential for CFOs to reconfigure finance processes and drive business insights. Finance skills are now just the “ticket to entry” into the profession.
As CEOs focus on generating and increasing revenue and steering growth; the resources which enable this need intervention from the CFO, equally tasked in supporting the achievement of organisational goals. These fundamental changes are shaping and driving a need for a new blend of technical, business, and behavioural capabilities with a much broader and vaster outlook.
Consequently, the current business and operating climate presents multiple challenges for CFOs and their teams but, also provide a great opportunity for ambitious CFOs to drive superlative organisational growth whilst acquiring a rewarding and enriching career for themselves and creating value for the organisations they serve – a win-win for all.