The changing role of the CFO and the finance team

Recently, there has been a realization that the finance team is in an ideal position to deliver real value to the organization beyond monthly close and reporting. The back-office financial stewardship role of controlling, compliance, and governance services alone no longer satisfies the needs of the organization. We have a unique position as keepers of financial data with a high level of analytical skills to use this information to drive the business.

As a result, the roles of the Chief Financial Officer (CFO) and the finance teams have shifted significantly. We are expected to leverage our end-to-end view of the organization to drive decision-making.

To meet these new expectations, we need to adopt a change mindset and develop a skill set to focus on what the organization needs: more strategy, insight, and leadership.

Developing the CFO skill set for the future

This changing role of the CFO is clearly illustrated by the results of a survey by Gartner, where 157 CFOs ranked their top ten priorities.

Of these ten priorities, a significant proportion is highly strategic in nature, with four of the top five priorities related to redefining how finance supports the organization. The CFO is now seen as working alongside the CEO as a co-pilot, vastly different from the traditional role of the CFO, which is to primarily oversee the work of the finance team. To succeed, CFOs need to have a broader strategic skillset than ever before.

So, where do we start this evolution? It goes without saying that, to play the co-pilot role, the CFO must have a deep understanding of the organization beyond the finance function. We need to understand the objectives of the organization and how the goals impact internal and external stakeholders. We need to understand how the organization operates, and what makes it tick. We need to understand the market sector and the competitors. When we have this knowledge, we can support and influence major initiatives.

Modern finance solutions

In the digital age, embracing and leveraging modern technology is crucial. A modern CFO is expected to use technology to effectively guide their business and to lead the setting finance’s technology strategy and roadmap initiative. With respect to finance, this includes systems that support the entire finance team, including remote working and collaboration, process automation (RPA), disclosure management, and reconciliations. Then there are solutions to support the financial planning and analysis (FP&A) team, such as planning systems, data repositories, and business intelligence (BI) tools for advanced analytics. These will also help us lead on other strongly linked initiatives, such as improved budget process efficiency, and developing a planning, budgeting, and forecasting strategy, both of which are likely to be achieved by leveraging technology.

Of course, while technology is an enabler to improvements in efficiency and effectiveness, it is never the silver bullet. The importance of people to the success of any organization cannot be understated. And the success of CFOs is no different. As a CFO, we can only achieve success with the support of a strong and capable team. With high-quality finance staff currently a scarce resource in the market, we must lead the way in attracting, developing, and retaining talent and, thus, leading the initiative of improving staff engagement. Meeting this challenge will require the development of talent programs, in partnership with human resources, to source talent from diverse backgrounds, build employer branding, enhance digital skills, and improve employee satisfaction.

Finally, it is not surprising that communicating and engaging with the board is a priority initiative for many CFOs in 2023. Developing effective communication and collaboration skills is now a requirement for the modern CFO. Not only must the CFO be a financial storyteller, understanding and explaining complex financial results and business performance to internal and external stakeholders, but we must also become expert collaborators across the organization.

Challenging as it may be modern CFOs need to develop a change mindset and skillset to meet the demands of the organization. As a result, the CFO’s evolution is very much a journey of self-development.

The changing role of the finance team

Along with the changes to the CFO role, the finance team is no longer simply responsible for recording financial transactions and ensuring compliance with regulatory requirements. They are expected to support us in all aspects of our evolving role and evolve as a team to deliver better insight to the organization.

While the finance team’s role is changing, the fundamentals of the traditional accounting back-office function remain. Transaction processing, general accounting, financial close, and reporting continue to be core activities in every organization. However, there is now added pressure on doing more with less, and to achieve this we need to improve the efficiency of core processes. The automation of the back-office processes, such as transaction processing, reconciliations, and financial consolidation, are repetitive tasks high on the list. It is only by improving the efficiency of these processes that we can ensure the close is timely and resources are concentrated on value-added tasks that directly support the evolving role of the finance team.

FP&A teams have also grown in importance within organizations as budgeting, planning, forecasting, reporting, and analyzing take center stage. To maintain best-in-class status, the FP&A team must be seen as a trusted business partner, working closely with other departments to provide insights into financial performance while identifying areas for improvement. As with the role of the CFO, understanding the business beyond the numbers is a fundamental prerequisite.

We have already noted the importance of technology when discussing the CFOs changing role. Ultimately, the finance team members will make technology work for the organization and lead the success of any finance transformation projects while working closely with the CFO on these initiatives.

As we move increasingly towards automation and data analytics, we must recognize the need to align capabilities with changing skillset requirements. Where once the finance team was the domain of the trained accountant, we now see data analysts, scientists, and project managers on the team. We are in the perfect position to invest in the current team creating more job fulfillment by looking beyond traditional finance skills to include analytical, problem-solving, communication, and leadership development in the team.

Conclusion

As a CFO, I expect to see my role and the role of my team continue to change as we strive to meet the organization's more strategic and analytical needs. To meet this challenge, we need to adopt a change mindset, develop skillsets to provide insights that inform business strategy and decision-making, and achieve this while continuing to deliver efficient back-office services. This is a journey of self-development for the CFO and our finance team that will result in us meeting, and exceeding, the expectations of the organization.