In today’s highly competitive business landscape, the best CFOs are helping CEOs and business owners make more informed decisions. As such, the role of the CFO has evolved.
Looking at businesses from small to large, across all industries and regions, including ones in the San Francisco Bay Area and Silicon Valley, very clear trends stand out on the strategies the best and most effective CFOs are adopting. Here’s an analysis of ten specific, success driven strategies.
1. Effectively balancing cost control with growth
Historically, CFOs lead businesses in critical times, when companies need to reduce costs, improve cash flow, scale effectively and increase profitability. When companies are in growth mode, the finance leader has sometimes been seen as overly conservative, prone to vetoing new ventures. The best CFOs strike a balance, bringing an informed and disciplined approach to pursuing organizational growth and innovation, while working to ensure the company takes on the right mix of risk.
2. Taking an active approach to planning
The most experienced CFOs are translating business strategies into finance strategies with an active approach to planning. To be effective, they need a deep understanding of the business from both financial and operational data. They also need to collaborate across differing business roles and functions, planning and adapting as needed with speed and agility.
3. Being part of a small, core group that truly runs the business
The value of an experienced CFO advising the business strategy of all teams or departments in a company is enormous. One corporate myth is that CEOs run companies. They don’t, at least not by themselves. Within any company there is a small yet integral group of people who make the decisions. To be part of this core team is a question of reality, not status. CFOs are always needed to resolve the many balances in the business.
4. Embracing a culture of analytics
The best CFOs are turning to state-of-the-art financial technology that is creating a culture of analytics. Big data has enormous potential to give companies real-time critical information that drives informed business decisions. The most business savvy finance leaders are quick to embrace this best practice.
5. Leading the charge in adopting new processes and tools
As a company evolves, tools and business processes must evolve with it. This is especially true as concepts such a big data become more widely accepted and used. Although some functions may resist change, CFOs can’t afford to be afraid of technology. They must lead the charge so that the organization avoids falling behind with profit margins and other important business targets, leaving it open to losing its competitive advantage.
6. Having multiple points of view
Great CFOs know it is important to have visibility into the entire organization, not just the finance function. They then use that unique business perspective to look at a problem from many points of view, to find the best possible resolution – connecting the dots between operational processes, products, sales and marketing strategies.
7. Arming a team with the right information
Inaccurate data can be a severe blow to a CFO’s credibility. The top chief financial officers fully understand this. They make sure to stay consistently up-to-date with accurate business performance data, leveraging cutting edge processes and technology to ensure complete accuracy.
8. Communicating effectively with the business
In a marketplace with intense global business competition and increasingly active shareholders, the CFO must be as adept as the CEO at communicating the company’s vision and performance. The best CFOs use the numbers to hand shareholders a clear view of the company’s current status – and help employees understand how they contribute to achieving future goals.
9. Using dashboards and charts to provide a clear view of financial and operational data
Financial tools again play a role in communication of critical data. Manually processing data from a variety of different reports is inefficient. Instead, the best CFOs are using dashboards that are more intuitive so that executives can better monitor and communicate data.
10. Fully investing in the business’ success culture
The best and most effective CFOs don’t just help to run the business, they become true partners who are fully invested in its success. As fully-invested partners, chief financial officers take responsibility for and completely understand the importance of what makes an organization successful, how to best generate revenue, as well as where potential pitfalls and drains on resources lie.