As businesses worldwide look to regroup and regrow out of the ashes of the pandemic, many CFOs are taking on enhanced roles beyond accounting and encompassing greater strategic responsibility across their organizations.
According to research from Brainyard spanning 21 industries, the CFO’s role has evolved into one of the pillars of corporate innovation, organizational change, and forward-thinking culture. Whether establishing strategic alliances, assessing technology, or seeking to boost revenue and earnings, CFOs are now expected to play a critical role in driving company growth. The change in the position has resulted in fewer of these executives now being exclusively focused on finance.
Having to manage these additional responsibilities while continuing to oversee the finance function at a time of serious quality talent shortage is a major undertaking.
These expanded responsibilities often result in the CFO logging the longest working hours in their organizations, creating additional stresses particularly in smaller organizations that do not or cannot rely on controllers or finance directors.
Here are some of the most challenging issues CFOs will likely face in 2023 together with some approaches that may keep the organization lean and competitive:
- Finding and retaining the right people.
In addition to the specialist accounting and finance knowledge required in a typical finance department, there has also been a dramatic shift in the range of skills required by CFOs to support their newly expanded roles. Forbes reports that nearly 80% of CFOs seek technological know-how in new employees. As more daily business processes become automated, technological knowledge is required to support these systems autonomously and not rely on stretched IT resources. Additionally, the skills to better and more quickly analyze data coming from them becomes critical.
Acquiring and retaining the appropriate talent requires a thoughtful approach to compensation, career-pathing and effective training. With new resources being so hard to find in today’s market upskilling the current talent pool is a necessity but if done right can be motivational and rewarding for key staff.
- Improving Communication
The efforts to better train and enable team members should be accompanied by the development of excellent communication skills. As the role of the CFO and his/her team extends beyond traditional accounting, the necessity of being able to set expectations and build consensus with customers, suppliers, regulatory authorities, leaders, staff and inter-department personnel via email, text, in-person will be pivotal in driving results.
Different types of communication – verbal or written, remote or in-person, real-time or periodic – require different skills and come more naturally to some team members than others. Setting expectations on required behavior, providing consistent reinforcement and encouragement, and backing this up with specialized training where appropriate can provide long-term operational benefits while improving morale and self-esteem.
- Innovating
The failure to embrace productivity gains offered by evolving technology can hold even well-managed companies back. Within the finance department embracing modern tools is key. Tools that automate and remove much of the tedium and risk from the daily processing, period-end close and regulatory reporting cycles can have profound impact on the overall organization.
By innovating using well-thought-out systems – often but not always cloud-based – the CFO can shift the focus of the finance team from “doing and checking” to “analyzing and recommending”. This leads to better information and more intuitive tools for managers across the organization, including predictive analytics, easy-to-follow dashboards, and key performance indicators. Decisions based on clear and reliable data can have a dramatic impact on competitiveness and profitability.
- Managing Risk
Business risk can take many forms. Traditionally within a finance department, it is well understood that internal controls and a division of responsibilities are key to ensuring sound management of the company’s financial resources. And in today’s economy where the CFO is often viewed as the economic guardian of the company, responsibilities often now stretch to the management of technology and security. On a broader plane, and according to PwC, almost three quarters of CFOs are concerned about tax policy and regulatory risk in the macroeconomic and political climate.
With many CFOs now viewing risk management as one of their biggest challenges, technology innovation comes to the fore again. Well configured ERP systems can enforce controls often difficult to manage manually. Financial reporting systems can improve accuracy, reduce the risk of error and ensure compliance with ever-changing regulatory requirements. And under-pinning these functional systems a Security Operations Center (SOC) paired with secure cloud computing has also become more appealing to CFOs managing fraud and cybersecurity risks because of its portability and scalability.
Summary
CFOs will continue to play an increasingly key role in driving business innovation in 2023. Challenges in assembling the appropriate teams, ensuring the right behavior, and reducing business risk can all be helped by incorporating the best technology appropriately in the right places. Although the challenges are daunting, CFOs who are innovative and approach the use of technology positively are poised to provide their organizations with the tools needed to remain competitive and succeed.
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