The rise of the strategic CFO

Corporate finance has never been more empowered to provide future-facing, strategic insights to business leaders. How is the role of the CFO changing as a result of technology and data analysis?

For ERS Medical – a medical transport and services provider based in Yorkshire - the past two years have required an adaptable, agile business to meet the challenges imposed by the pandemic. The company has had to change its working practices not only in response to the hybrid working model, but in regards to business critical partnerships and operations.

It is no outlier, either.

Adapting to change – even beyond the pandemic – has required boards to become more proactive, more collaborative and more creative in how they solve problems and build stronger businesses. The role of the CFO within those boards is a prime example of how this transformation is improving how companies operate.

Software company Sage recently examined the role of the CFO. It asked finance leaders about the skills and abilities they find it most difficult to secure. The top two responses were ‘stakeholder communication’ and ‘data skills/technological literacy.’ A close fourth was ‘advanced data analytics.’ This clearly indicates a need for greater digital literacy among chief financial officers.

But no less telling are the least pressing skills. Only 13% of CFOs said they lacked ‘leadership and people management.’ And only 16% said ‘knowledge of the wider business’ was a difficult skill to acquire. CFOs are integral to corporate leadership, that much is clear. What the study does prove is changing is the way in which the CFO integrates and collaborates with the rest of the company’s leadership.

“Gone are the days where finance sits in a closed room and just spits out numbers,” Richard Moorin, UKMMI head of finance at Sage, says. “If you give finance people the right tool, it gives them the free time to think, to spend more time with business leaders to talk about the numbers and look forwards.”

By creating a forward-looking finance function, the business is capable of being more proactive, rather than simply looking back at numbers from the past quarter or year. This is allowing CFOs to add strategic insights and collaborate more with their colleagues in the C-suite. “We’ve never really had the time to do that before,” says ERS Medical’s finance controller Katherine Lees.

That is not only an added benefit for the company’s resilience and planning but for its efficiency. With tools like Sage’s Intacct software, which automates traditionally time-heavy tasks like payroll, expenses and payments management, finance departments spend less time processing numbers and more time analysing what those numbers are trying to say. By using those insights to think strategically, they can deliver tangible benefits to the bottom line.

This, however, has led to the need for finance professionals with greater data analysis and digital skills, a phenomenon which long-time finance recruiter Robert Russell, regional managing director at Reed, says is only increasing. CFOs are now required to be “business partners in mindset,” “able to work with different senior stakeholders in a company.”

Russell adds that data insights can contribute to a greater understanding of corporate risk. Finance professionals can build a framework for cyber risk management, operational resilience and competitive advantage. “If you’ve got a commercially switched-on strategic senior finance leader in your business, they will not only help your company to make good decisions, they’ll also collaboratively work with other senior stakeholders to present a different point of view on something. That helps make better business decisions and ultimately drives business performance,” he says.

Thinking more cross-functionally about a business’ performance means that other teams are empowered to understand finance more and improve their own work based on those insights. ERS Medical uses financial information to inform operations, for example, to understand costs, deliver savings and plan for potential risks. “It just empowers everyone at all levels to be able to do what they need to do so that the business can thrive together,” Lees says.

Moorin agrees, “We’re not the ‘computer says no’ finance department. You’re giving something to people that helps them understand the numbers and actually see in real time what the impact is.” Rather than deliver backwards-looking reports, real-time data can support business leaders in making effective decisions. “It allows for better conversations and people start to see finance as a valuable resource rather than just an overhead,” Moorin says.

“We’re not the ‘computer says no’ finance department. You’re giving something to people that helps them understand the numbers and actually see in real time what the impact is.”

Making data-driven decisions quickly and accurately means companies can “change tack and direction at any given point, if you need to, based on what the data is telling you,” adds Samantha Morrison, product marketing manager at Sage. She points out that this contributes to the growing credibility of the strategic CFO.

But finding the right people to fill those roles requires finance professionals to not only have the accounting nous, but to be able to see the value in acting as a strategic business partner in the boardroom. Companies, Russell says, are looking for CFOs who look toward the future. However, gaining those skills require finance professionals to either upskill by undertaking executive coaching and training or to extend their experience beyond the scope of accounting. Russell says sometimes this experience is gained at smaller companies, where departments are more collaborative by necessity, but often it’s a matter of seeking courses and career education that can help improve the digital acumen of the finance professional.

For Lees’ part, Sage made that straightforward. Even in the challenging conditions posed by the pandemic, the easy access points to Sage’s technology allowed the finance team to implement digital solutions with ease, which helped alleviate some of the stressors of the shift to home-based working. By eliminating some of the need to process numbers, Intacct allowed ERS Medical to focus on changes to the business.

Moorin says, “I think the nature of financial leadership has changed quite a lot over the last few years. The world moves a lot faster than it used to; so, you can’t just sit still. You have to be able to try and report and provide analysis in relative real time. You have to have some tools that allow you to do that. Because if you don’t, it just doesn’t allow the business to be as adaptable as it needs to be these days.”

The strategic CFO has proven its added value to the business. For CFOs to reach the point where they are seen as future-facing partners, they must be willing and able to embrace technology. But, when the tech does the hard work for them, the benefits are easy to see – and to quantify.

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