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The CFOs of today

Key to Optimized Organizational Performance

By: Hanadi Khalife, Senior Director MEA & India operations at IMA (Institute of Management Accountants)

The CFOs of today

Whether it is in the midst of the coronavirus pandemic, global trade wars, geopolitical tensions, or simply the myriad complexities of business, CFOs are in the thick of the action – either salvaging a difficult situation strategically planning for long term growth and very often both. The CFO’s role was already changing before COVID-19 struck, but it has become even more critical to enterprise survival with the pandemic.

Whether to hold off on marketing spends, review business performance or seek foreign investments, strategic decisions are now predominantly being driven by the CFO’s office while being front-ended by the CEO. This is a far cry from the earlier role of being a ‘table stakes job’ where the CFO and his team were expected to manage balance sheets, cash flow, working capital, and so on, with little to no involvement in the operational responsibilities that rested with others.

Today, a CFO faces many more challenges than ever before, such as increasing economic volatility, fluctuating oil prices, turbulent currency markets, and geopolitical shifts of power. This requires that they increase their partnership with the corner office to make sense of every situation and navigate unchartered waters.

The CFO and his team

The CFO and his team are now expected to add value well beyond the traditional roles of cost management and controls through good governance practices. Whether they are operating in a large or small company, CFOs have increasingly expanded their involvement and contribution beyond finance and accounting operations. They now have a much closer insight into operations, strategy, and even IT. The pandemic has helped accelerate the evolution of the CFO’s role to that of a trusted business advisor and strategic business partner.

Impact of digital transformation

There is now a growing conversation about the impact of digital transformation on the finance and accounting profession and the rise of the “strategic CFO”.  And, in the new normal of a post-COVID-19 world, this conversation is expected to get even louder. A new digital landscape led by automation is driving CFOs to see things differently. As the traditional accounting function gets taken over by software programs, much of the heavy lifting will be handled by technology, leading CFOs and their teams to focus on interpreting the data, rather than the recording and reconciliation of it.

This also means that CFOs will be taking on a more operational role and looking deeper at data around all facets of operations and sharing insights with the CEO and the board to inform the next course of action. Therefore, the CFO’s role is becoming more cross-functional, serving as the integration hub for key business processes, as a catalyst for change – including business transformation, and as a consultant or trusted business advisor in helping to create sustainable growth.

In the US, for example, the role of the CFO became significantly more important part as a reaction to Sarbanes-Oxley. The sweeping 2002 law imposed reporting and audit controls on public companies to avoid the kind of accounting scandals that rocked Enron and WorldCom just a year earlier. The Middle East too, has enhanced its regulatory compliance ecosystem. The game rules have changed for CFOs in response to the increasingly uncertain, dynamic, and global economic environment in which businesses operate today.

New sets of digital technologies in nature

Having to deal with a more dynamic external environment and increasingly complex organisational ecosystem requires CFOs and their teams to grapple with new sets of digital technologies in nature. Technology is no longer a stand-alone function, but one embedded in all aspects of the business. Better tools that make use of data analysis, automation, AI and machine learning are becoming mainstream.

Technology is evolving quickly, providing the potential for CFOs to reconfigure finance processes and drive business insights. Finance skills are now just the entry ticket into the profession.

As CEOs focus on generating and increasing revenue and steering growth, the resources that enable this need intervention from the CFO, who is equally tasked with supporting organisational goals. These fundamental changes shape and drive a need for a new blend of technical, business, and behavioural capabilities with a much broader and vaster outlook.

Consequently, the current business and operating climate presents multiple challenges for CFOs and their teams, but also provides]] a great opportunity for ambitious CFOs to drive superlative organisational growth whilst to acquire a rewarding and enriching career for themselves and creating value for the organizations they serve – a win-win for all.

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