7 Success Factors In Building a Highly Effective Office of the CFO

An important key to success for any growing company is to ensure the office of the CFO evolves beyond its traditional focus on record to report. Finance chiefs understand their companies’ inner workings best, can interpret the language of business — accounting — and are being asked to take on bigger-picture roles within their organisations. 

As CFOs become multidimensional strategists, they need new skillsets and tools. Technology is playing a larger role in helping finance leads innovate, enhance processes, and drive organisational improvements. 

Finance Under Pressure

As CFOs take on more strategic responsibilities, finance departments are stretched. They’re managing higher degrees of complexity and find themselves under greater scrutiny. External regulators and analysts are asking more questions, internal executives and department leads need more support, and boards are becoming more financially savvy. 

Deadlines are also getting tighter. Where a two-week close used to be the average, the process is now expected to be completed in seven days or less, with an emphasis on “less.” Many companies are moving to a continuous close, (opens in a new tab) whereby the accounting team is constantly processing and aggregating relevant financial information versus doing this only one time at the end of the month or quarter — essentially closing the books 24-7-365. 

Finance departments are also dealing with new regulations and compliance requirements, such as environmental, social, and governance (ESG) reporting, and shepherding their companies through the complexities presented by cryptocurrencies and geopolitical events. 

Smart companies know they must move quickly and are leaning heavily on their CFOs, who in turn need more from their teams. So how can they fulfil expectations?

8 Steps to Success

Here are eight ways financial leaders can create a highly effective office of the CFO: 

1. Drive process efficiencies. Historically, accounting focused on closing the books and ensuring a strong governance, risk, and compliance (GRC) environment. That was enough to satisfy auditors, reporting agencies, and everyone else involved. Today, the department is expected to drive process efficiencies versus just documenting problems and sharing them with the rest of the organisation. Progressive CFOs are looking to automate the entire process from data capture to approvals and payment — without manual intervention anywhere down the line.

2. Interpret the business. Accounting compiles the historical data from a company's operations and accounts for these details in the financial statements, which is why accounting is referred to as the “language of business.” So, the CFO is de-facto the translator, responsible for interpreting gathered data, projecting the future from it, and making suggestions and decisions based on what data shows to be the best possible course of action. 

Out: Sending reports with uninterpreted numbers. 

In: Summarising data in context so everyone can understand it. The CFO’s interpretations and projections should include logical explanations for what's going on and insights into what the outcome may be for the company if it continues to do things a certain way. For example, understanding the profitability of products and services provides a pathway for a company to increase revenues by focusing on those items that add most to the bottom line. 

3. Know which levers to pull. Ensuring that people have access to data is great, but it’s just as important that individuals really understand key performance indicators (KPIs) that they can influence to drive departmental and overall company performance. 

As forecasts, budgets, and inventory demands change, the CFO and the organisation as a whole must understand what moves the needle on KPIs. A great example of cause and effect is workers compensation insurance premiums. Most companies simply take the overall premium, divide it by number of locations, and send out the premium cost for each location to cover. When one company looked into what drives the premium cost, it was pretty simple: The longer an employee is out of the office due to a work-related injury, the greater the risk for a lawsuit that will drive the premium up. The answer: Getting employees back to work as soon as possible in some capacity mitigates the potential for lawsuits. The KPI is “# of Days Out Due to Injury,” and tracking it and building programs around helping people who have been injured get back to work are a win-win for employees and the company, not to mention lowering premiums. 

4. Become an influencer. A key focus for CFOs is to understand how to win the hearts and minds of stakeholders, both internal and external. The ability to articulate a vision and be passionate about where the company is going is paramount to achieving objectives.

One way to gain influence is to present quarterly or annual results to investors or department heads; that increases the ability of a finance leader to deliver the facts and context into how it fits into the overall vision for a company. This will build confidence with investors and, maybe, inspire colleagues. 

5. Be open to new concepts. Top CFOs tend to be open to embracing new opportunities and curious about new ideas. That openness is necessary now, especially given the rate of obsolescence and speed of change. In fact, the CPA exam is evolving to reflect the skills and knowledge CPAs need in a technology-driven marketplace. More importantly, it is imperative that CFOs embrace new ideas so they can effectively manage a job that today is a combination of two, or even more, full-time positions. 

6. Ensure high AQ. AQ, or adversity quotient, measures human resilience and the capacity to bounce back from being knocked down. Employees with high AQs tend to have better retention rates, and that is critical for accounting and finance teams that are in the midst of transformation, because the nature of business transformation today means disrupting the way people work. 

It is important that CFOs understand that transformation is a means to an end. Nobody transforms just to transform. Be sure to clearly define and articulate the reason for the effort. 

7. Embrace technology. If you lack an appreciation for technology, it’s time to change that perspective. Whether it is quickly and accurately closing the books, automating day-to-day processes like accounts payable, or driving data analytics throughout the organisation, technological acumen is required. CFOs can leverage technology like NetSuite’s enterprise resource planning (ERP) platform and FloQast’s accounting workflow automation software (opens in a new tab) to their advantage. These platforms provide a suite of analytic tools that can help automate processes and get work done faster and with greater accuracy and insight. 

One of my favourite artworks is The Vitruvian Man, a late 15th-century drawing by Leonardo DaVinci. Intended to explore the idea of proportion, the piece is part work of art and part mathematical diagram, conveying DaVinci‘s belief that “everything connects to everything else.” Today, CFOs must be Vitruvian in their approach, understanding that everything connects to everything in business.

No longer can a CFO get by just counting the beans — CFOs are now expected to help grow the beans as well. Having a strong knowledge of and leveraging the right technology is the key to finance teams meeting and exceeding expectations. 

That concept of being a “Renaissance CFO” is hard to argue with, given what companies are now expecting and that the CPA licensure model requires candidates to demonstrate core skills in accounting, auditing, tax, technology, and data analytics. The new definition for a CFO is one who is knowledgeable, educated, and proficient in a wide range of fields. Perhaps they may even rename the CPA exam to be the Uniform Renaissance CPA Examination. 

The CFO’s job is no longer just about numbers — these 4 soft skills (opens in a new tab) are more in demand than ever.