The outlook for the UK’s economy is uncertain. Fluctuating energy prices due to surging demand and supply disruptions, along with Brexit, and on-going environmental issues, all mean that today CFOs face more challenges than ever.
But it isn’t just the wider economy that is causing these challenges. As businesses evolve, the scope of the CFO’s role is expanding. CFOs now have to balance competing demands on their expertise, priorities and time, while often playing a transformational role in driving strategy for their business. These expanded responsibilities are creating a tension between the CFO’s financial and strategic roles.
We recently held a roundtable event in the Thames Valley, during which attendees discussed what it takes to be a successful CFO. As a result of the discussions, a CFO Scorecard was developed, outlining four key responsibilities currently held by the CFO:
1. Operational efficiency in an increasingly transparent world – including management, tax and statutory financial reporting.
2. Business protection activities – safeguarding the assets and financial integrity of an organisation.
3. Value creation across an organisation – either directly or by enabling improvement of business performance.
4. Stakeholder Management by the Finance Function and the leaders within it.
In addition, our recent CFO Survey looked at how more than 400 senior financial executives see both the current state and the future of their business in the areas of risk, technology, investment and strategy, as well as identifying the challenges these executives face in adopting efficient solutions in these four areas.
Those CFOs surveyed said they now spend over one-third of their time as strategic advisers. This was supported by the fact that strategic planning ranks third as a priority for the finance department, outranked only by increasing cash flow and reducing costs.
However, investing in strategic planning is a trade-off that can reflect either a cost or an opportunity. For instance, many CFOs are now getting involved with operating metrics which is a step beyond the financial metrics they have traditionally used.
Today’s CFOs are expected to work in collaboration, by serving as the integration hub for key business processes. They must be catalyst for change and act as a consultant or trusted business advisor in helping to create sustainable growth.
Increasingly CFOs will have to deliver on a wide range of fronts: driving a more competitive finance function, establishing ever more robust risk management strategies and supporting their businesses to develop effective strategies for growth while remaining cost competitive.
The tension that the CFO is experiencing between priorities inside and outside of the finance function increases the need to streamline processes through technology, which, in turn, promotes more integration between finance, risk, treasury and operations. They must now consider and prioritise the core versus non-core finance activities. By leveraging shared services for non-core processes, whilst using technology and data analytics for core activities they are able to focus limited resources on delivering the highest value for the business.
CFOs in today’s volatile global economy and dynamic business environment have heavy demands on their time and resources as their traditional roles evolve to address these changes. Successfully navigating these challenges means staying on the front lines of risk management, data strategy, emerging technologies and investment strategy to drive the business forward effectively.