The office of the chief financial officer (CFO) is a revolving door – as of Q1 2024, CFO turnover has reached the highest level in three years,1 now only sitting on the hot seat between two and five years. The CFO role has evolved; they are no longer confined to the back office and are now front and center in business strategy and execution. As organizations face new challenges and opportunities, the successful CFO must partner with the business, look around corners, close the books quickly, own the finance digital revolution, supercharge financial planning and analysis (FP&A), and develop a cash culture. Doing so will help "future-proof" the role and bring added security to an otherwise volatile position.
Five strategies for adapting to the changing landscape:
- Reimagine Business Practices
- Agile Finance Operations - Streamline FP&A processes, automate routine accounting tasks, and leverage data analytics.
- Finance Culture - Position Finance and Accounting teams as business partners with a deep lens into the business. Accounting close and variance reports are table stakes.
- Technology Adaption - Explore cloud solutions,
robotic process automation, and predictive analytics.
- Support Remote Employees
- Empathy and Technology - Provide virtual training, communication platforms, and mental health resources.
- Data Security - Strengthen cybersecurity
measures to protect sensitive financial data.
- Maintain a Customer-Centric Approach
- Know Your Customer - Understand changing customer expectations and align financial strategies.
- Personalization - Use data-driven insights to
personalize services and customer experiences.
- Own Enterprise Risk Management
- Risk Radar - Establish a risk radar to identify risks that could impact financial stability.
- Scenario Planning - Conduct scenario-based risk assessments, develop scenario models, and develop contingency plans.
- Robust Controls - Evaluate segregation of duties, impose regular audits, and establish clear approval workflows.
- Governance Framework - Establish a governance
framework with defined roles, responsibilities, and accountability.
Adherence to a Delegation of Authority is critical to ensure strong
financial controls are in place.
- Cultivate a Cash Culture
- Working Capital Management - Manage working capital efficiently through accelerated collections and favorable payment terms.
- Cash Forecasting - Develop 13-week cash flow forecasts to anticipate cash needs and allocate resources accordingly.
- Zero-Based Budgeting - Instead of relying on historical allocations, review budgets from scratch periodically and justify every expense.
- Investment Strategies - Invest excess cash wisely through a structured investment management program.
Putting It All Together
The future-proofed CFO is an agile strategic leader who balances risk management, internal controls, and a cash-focused mindset. By embracing these elements, CFOs can steer their organizations toward sustainable growth and financial resilience. Remember, the CFO's role extends beyond spreadsheets; it shapes the financial destiny of the entire organization.
Footnote
1 CFO Dive - CFO turnover at public companies soared to 3-year high in Q1
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