The role of the chief financial officer (CFO) has undergone a profound and strategic transformation. Traditionally, CFOs mainly focused on accurate financial reporting and maintaining financial controls, serving primarily as a support function. However, CFOs have had to adapt as businesses have grown in size and complexity. During the 1980s and 1990s, their responsibilities expanded to include financial planning and analysis, requiring them to play a more strategic role as the CEO’s business partner in driving business growth.
Today’s CFOs have evolved beyond financial stewardship to encompass a wide range of strategic activities, including financial planning and analysis, capital management, risk management, business strategy, and investor relations. They now support business development across their organizations in a multidimensional capacity.
This evolution has been driven by the need for CFOs to contribute to the company’s overall strategy. They provide predictive analytics to chief executives, helping them make informed decisions and anticipate future trends in an increasingly complex and tech-focused landscape.
Indeed, the relationship between the chief executive and CFO is crucial to a company’s success. According to research by Gartner, 80 percent of CFOs have strong relationships with their chief executives, built on trust and respect.
Conventionally, CEOs focused on overall strategic direction and operational execution, while CFOs provided financial insight and guided financial decisions. However, these boundaries are increasingly blurring, with CFOs' responsibilities transcending conventional financial reporting.
According to research by McKinsey, CFOs now not only lead their companies’ finance functions but also serve as key colleagues across business functions and as strategic partners to the chief executive in maximizing value creation. They help shape the company’s portfolio strategies, make major investment and financing decisions, and communicate with key stakeholders while managing finance teams.
The expectations on CFOs have never been higher. The rising importance of financial data demands that CFOs become strategic partners to chief executives. In this capacity, they are expected to offer strategic financial leadership, shape risk management and compliance competencies, guide efficiency and cost control programs, provide detailed financial reports and transparency, play a crucial role in talent development and retention, and continue to innovate in a changing economic landscape.
According to research by SAP, CFOs are increasingly working closely with other C-level executives. Eighty percent of CFOs believe they must collaborate more effectively with HR heads, with 87 percent noting that the crossover between finance and HR is more significant than ever. Amid greater competition for talent, CFOs can help identify skills gaps and allocate the right people to fill them, adding further value to their organizations.
Communication has also become a key part of the CFO’s skillset. They must be adept at communicating strategically with both investors and boards. Beyond simple earnings calls, today’s CFO helps establish credibility for the company’s strategic direction.
CFOs are also increasingly turning their attention to Environmental, Social, and Governance (ESG) issues. According to McKinsey, many CFOs are eager to play a larger role in shaping their company’s ESG programs, aiming to align social and climate issues with the company’s overall strategy. When CFOs are engaged in ESG initiatives, there is a 20-30 percentage-point higher alignment between ESG goals and strategic objectives.
Nearly a third of CFOs are analyzing how climate change scenarios could impact financial performance, according to PwC. These forecasts are integrated into business strategy, helping to identify risks and explore opportunities for growth through sustainable products and solutions.
As CFOs evolve from traditional roles, they need a more holistic understanding of the entire business and how it creates value. With companies becoming more technology-focused, CFOs must adapt and integrate new technologies into their remit. According to PwC, 88 percent of CFOs and other business executives struggle to capture value from their technology investments.
In recent years, CFOs have overseen investments in new technology to provide faster insights into business operations. However, only 60 percent of traditional finance tasks were automated in 2022, according to Accenture, indicating room for improvement.
Accelerating digital transformation can enhance efficiency and productivity. The emergence of AI, automation, and other innovations is crucial for creating additional value. AI-driven data analysis allows CFOs to identify growth opportunities and allocate resources effectively. PwC reports that 64 percent of CFOs and finance leaders are investing in technologies like AI and the cloud.
Digital tools help business owners save time, stay organized, reach new customers, increase customer satisfaction, and manage cash flow. Cloud systems, for example, allow CFOs to synchronize costs with real-time demand.
Technology advancements bring risks such as cybersecurity and data privacy, which CFOs must address. Cyber criminals pose significant threats, capable of causing financial and reputational damage. Managing these risks and investing in cybersecurity is a priority for CFOs.
Despite the evolving role of CFOs, traditional areas like strategic cost reduction remain central. According to PwC, 89 percent of CFOs find balancing cost cutting with investing for growth a top challenge. Chief executives share this focus, with 52 percent prioritizing cost cuts while seeking revenue growth through price increases and product diversification.
CFOs should align cost-management programs with the company’s strategic vision to create a leaner, more agile organization. Reactionary measures should be replaced with strategic thinking for long-term growth and employee well-being.
Looking ahead, CFOs must evolve their roles to meet stakeholder expectations, contributing to innovation, efficiency, and strategy. The future CFO will be a pivotal figure in shaping strategy, requiring skills in project management, commercial fluency, and technical proficiency. Commitment to diversity and inclusion is also essential.
The complexity of modern business operations demands that CFOs manage a wide range of responsibilities, from financial management to strategic planning. They can be innovators who create competitive advantages and drive long-term growth. CFOs are no longer just ‘bean counters’; they are agents of change, guiding their organizations toward value and sustainability.
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