By: Nick Rose, CFO at Enable
At a time when companies face persistent economic volatility, widespread supply chain disruptions, and many other crises that could have a significant impact on their revenue streams, CFOs have never been more pivotal to business success. This is why it’s essential for today’s CFOs to develop innovative ways to make operations more efficient, create alignment across departments and teams, and streamline decision-making processes.
Next-generation CFOs can help companies navigate one of the tightest labor markets in decades, supply chain upheavals, and other economic obstacles like surging inflation. But to accomplish these goals, CFOs have to be equipped with the right tools – especially a digital automation platform that will help them optimize processes, provide all stakeholders with a single source of truth, and facilitate communication and collaboration. CFOs need all their data to be reliable, and they can no longer rely on slow and error-prone manual resources.
The role of the CFO is constantly evolving. Effective CFOs are much more than accountants – they use financial data and expertise to help companies make the best decisions, and they play a vital role in mobilizing key personnel around concrete business goals. The most common misconception about CFOs is that they’re constantly trying to reduce spending wherever they can. Companies should move beyond this notion and recognize that CFOs are critical strategic partners and revenue generators.
How CFOs are transforming decision-making
CFOs have gradually become more strategic and business-focused in recent years, but with increasing access to in-depth financial data and the availability of digital platforms for analyzing and sharing that data, they have become integral to the decision-making process. According to a survey of CFOs around the world, 97 percent say their overall level of strategic influence has increased.
For example, ongoing supply chain disruptions have made accurate financial forecasting more important than ever. CFOs and their teams can assess the causes of supply chain disruption and make strategic recommendations to build greater supply resilience. When CFOs have supply chain visibility, they can provide insights about partner relationships. If a supplier is charging exorbitant fees, for instance, this could be attributable to a lack of working capital or some other financial problem. Rising inflation, an extremely competitive labor market, and geopolitical tension will make these problems more acute for the foreseeable future. This has significant implications for contract negotiations and the health of supplier relationships.
Beyond tracking the financial status of supply chain partners, there are many ways CFOs can inform strategy, such as the establishment of business goals, the development of metrics for measuring progress, and the identification of economic patterns and shifts in consumer behavior. These are among the most fundamental contributors to business success, and a next-generation CFO will prioritize all of them.
Building an effective finance team
The effective deployment of people has become a major concern for CFOs. They’re focused on allocating labor hours to strategic goals, cultivating and deploying interdepartmental knowledge, decreasing people turnover, and helping teams become more productive. A PwC survey found that 83 percent of CFOs view hiring and retaining talent as their top key to growth in 2022 – higher than any other issue listed. Meanwhile, more CFOs view C-suite collaboration (particularly in the form of “establishing finance as a business partner across the enterprise”) as a priority for finance than any other focus area.
Today’s companies face more competition for market share than ever before, which is why the need for strategic planning and aggressive growth goals has become more pressing. Finance and sales teams must collaborate to align their strategies with a set of defined company goals. CFOs are responsible for outlining these goals and generating buy-in from stakeholders across the company.
CFOs need to be capable of empowering their colleagues across departments – from sales to AP. By bringing all company stakeholders together around a core set of business goals, CFOs will encourage teams to innovate and develop new ways to secure sustainable business growth.
Centralize and automate your data processes
CFOs need to be capable of identifying and capitalizing on market trends, addressing inefficient processes, and ensuring that sales incentives are aligned with business goals. Real-time access to data and analytics gives sales and finance leaders the ability to collaborate and plan proactively, while allowing sales leaders to identify performance issues. Meanwhile, finance leaders can monitor revenue gains and make adjustments as economic conditions, partner relationships, and consumer preferences change.
To fully leverage their data, organizations need digital platforms that will help them create a single source of truth accessible by finance and sales teams. This is why it’s no surprise that, as a recent Gartner survey notes, 82 percent of CFOs say their investments in digital resources are accelerating. Deloitte’s 2021 CFO Signals survey reports a similar finding: 92 percent of CFOs “see opportunities in embedding technologies and automation into their organizations’ operations.” And according to McKinsey, the proportion of employees focused on digitization who report directly to the CFO has increased significantly since 2018.
CFOs need to become less reliant on outdated manual processes, which are inefficient and susceptible to mistakes. The implementation of a centralized data platform will allow CFOs to make financial insights a core part of the company’s overall business strategy, while providing the tools they need to execute that strategy as effectively as possible.