Last editedJan 20206 min read
Today’s CFOs possess the expertise and business experience that colleagues and stakeholders rely on to define and align business strategy.
While there are new tools at their disposal, such as data, technology and increasingly specialised talent, that can help them fuel business growth, there are different opinions about how these diverse areas can best be harnessed to boost the bottom line.
In this guide, CFOs from a number of leading businesses tell us how the main drivers of the modern financial world offer great opportunities – but also present novel and evolving challenges.
The data challenge
Data is a tool that can successfully drive understanding and planning for business growth, but brings with it hidden pitfalls. Mushrooming volumes of data mean savvy business leaders need the people and technology to manage and make sense of it. Otherwise, business strategy can soon be bogged down by information, in place of knowledge and informed analysis.
Catherine Birkett, CFO at GoCardless:
When I started out, data analysis was a much smaller component of a CFO’s brief. Today there are huge issues for companies, not only in managing data, but also ensuring that its quality and accuracy are fit for purpose. For data to be effective it has to be used intelligently.
We’re always looking for ways to interpret and manage data because the volume we assess is growing year on year, and it’s important to the fortunes of our business that we correctly analyse and question what’s before us.
My team spends its time focusing on what the data actually mean to the business and identifying trends that can be crucial to business success.
Phillipe Gagneux, CFO at Sidetrade:
As part of their extended duties, CFOs must be more relevant when driving performance, by focusing on data and developing predictive and prescriptive analyses that will enable them to help shape the company’s future. CFOs have, therefore, become key players in the company's competitiveness.
The increased efficiency this offers enables CFOs, together with operations teams, to create more added value in order to work on strategic scenarios, modelling and execution. Through algorithms and leveraging financial data — but also non-financial, external data — CFOs can continuously feed business management models by reducing decision-making time.
Embracing technology
The tools of the CFO’s trade have changed immeasurably – as technology enables the streamlining of operations, brings cost reductions through automation and offers greater visibility across a company’s cost centres. Those benefits are only available, however, if a CFO has a deep knowledge of the digital solutions available, possesses an understanding of how they work and knows where they can best be deployed.
Mike Coombs, Principal at The FD Centre:
Business owners are no longer confined to clunky pieces of equipment that only an accountant can use. The hardware is no longer the constraint – the real constraint now is the imagination. You’ve got to get in a position where you have a team that is prepared to embrace the new. Now we’ve got cloud-based accounting systems that are much more user friendly and can extract information that help them to run the business.
Technology is also taking human error out of the accounting side of the business. Innovations such as text recognition software is enabling operatives to photograph receipts and other documents to digitise data. By automating the routine parts of the day to day business, companies can redeploy staff to more value-added tasks or reduce headcount - either way, the bottom line is improved.
A big issue is cash flow; if you can introduce an automated payment method such as GoCardless which integrates with accounting software, you can guarantee for example, that monthly annuity type income is paid when expected rather than having to be chased. This in turn improves the integrity of cash flow forecasting and frees up time to spend on value added tasks to grow the business.
David Wolffe, CFO at Wolffepack:
There’s been a proliferation of digital tools a CFO can use, so we also have the challenge of knowing which ones to use based on what’s right for the business. We’ve got to arm ourselves with the right tools and people. That means IT infrastructure decisions have become bigger than they were for a CFO.
Digital tools are more capable of adding value and that obliges the CFO to be more qualified at developing them in ways akin to a CEO.
Catherine Birkett (GoCardless):
Technology is key in helping CFOs interpret, rather than just manage data. Frankly, we just wouldn’t be able to interpret the ever-growing amount of data that comes before us without the help of specific software.
Phillipe Gagneux (Sidetrade):
Thanks to digital technologies, CFOs have a much more tangible impact on business strategies and on the added value that can be generated.
Better leadership
The arsenal of skills required in today’s finance teams has expanded, rendering redundant the view of CFOs as being mere “number crunchers”. Now they’re expected to lead boardroom discussions, provide wise counsel and offer a sound vision for future business growth.
Phillipe Gagneux (Sidetrade):
CFOs still have their own traditional assignments, but we have now become fully involved in the development of business strategy. With business models changing, companies transitioning to digitalisation and the new AI and 'Big Data' technologies that are being brought to us every day, we have to help companies go through a high-value transformation process.
David Wolffe (Wolffepack):
The one thing the CFO can do better than anyone else is join the dots across this complicated data landscape - between operational actions and revenue, growth, profit, cashflow and so on. That’s getting harder and the CFO is now better placed to perform that role.
The search for talent
Finding the right personnel is proving to be a headache for a large proportion of CFOs as they look to recruit and retain people to fill a seemingly ever-widening variety of roles required of a modern financial department. Despite many reporting an expansion in their recruitment strategies, the number of CFOs who see no prospect of hiring more staff this year outstripped those who do by about 50 percent in a recent Deloitte survey.
Catherine Birkett, (GoCardless):
Top notch accountancy skills may be the traditional core of our work, but as a CFO, my job needs to be about way more than being an accountant. A good CFO is backed by a team with a broad range of skills. I’m looking for people that can analyse, question, and interpret the large volumes of data that we use to back many of our business decisions.
Phillipe Gagneux (Sidetrade):
CFOs must work on the evolution of skills and talent management within their team. Even if technical expertise is still paramount, skills have to shift towards a greater ability to leverage and analyse data.
Mike Coombs (The FD Centre):
You may be restricted to a certain degree by people who have worked in a company for many years and haven’t really changed. If staff can’t adapt to something new or more challenging then things will go wrong.
David Wolffe (Wolffepack):
Some of the most important decisions you ever make as a CFO are about the people. With good people you can cope with any problem.
The CFO has to stay at the leading edge of what data manipulation techniques and tools are out there but never can truly master that world – they have to be informed enough but, critically, they’ve got to pick the right people on their team that have the right specialised skills to deliver in those areas.
Outsourcing senior roles has become increasingly popular among small companies that don’t have the resources to employ a highly skilled financial professional full time. But the benefits of that are limited.
The gig economy has reached finance directors to some extent. There’s a growing awareness of how transferable good commercial CFO skills can be. But to be an effective CFO you have to build relationships. You’ve got to get to the commercial heart of how a business works. It’s best to be embedded.
Relationship management
Where a CFO would once have provided the data and manned the flipcharts for a CEO at board or shareholder meetings, they’re now as likely to drive agendas. That means razor-sharp interpersonal and communication skills have become an essential part of a CFO’s armoury.
Catherine Birkett (GoCardless):
CFOs are definitely embracing greater power in the boardroom - they add huge insight to the decision-making process. I feel very comfortable talking about the financial side of the business, but when I’m briefing board members, I also stress to them the importance of the numbers, of data, and of an analytical approach. Having a CFO with this perspective is vital to every organisation.
A mathematical background and an aptitude for coding, has given Catherine an advantage over her peers, providing her with the breadth of skills necessary in today’s financial environment. But CFOs must also constantly develop their communications skills.
Part of my success stems from an ability to deliver messages and speak confidently to stakeholders, whether it’s public speaking or in a high-level meeting. When it comes to the board, they quite rightly expect you to offer informed opinion and balance.
Phillipe Gagneux (Sidetrade):
Companies now need CFOs who can manage the transformation and strategic vision of their organisation with real leadership. In that respect, the CFO has to show real communication skills, as much internally to drive change, as externally with partners and shareholders. Social and influencing skills – are now a key component of their profile.
David Wolffe (Wolffepack):
There’s so much more data around and access to it is much wider; you’ll have board members logging onto data warehouses themselves rather than relying just on the CFO drip feeding them. Consequently, the bar has been raised on how the CFO adds value over and above the raw data.
That’s made it vital that CFOs have better presentational skills and soft power skills.
Just presenting numbers would have been enough before because people were relying on the CFO as a major conduit for key financials. Now it's taken as read that the numbers are out there, so explaining what they mean, the implications, forecasting and translating this information into messages that the board can understand has become a means of adding value in a way that only the CEO did in the past.
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