3 Things to Do and to Avoid, or a Code of a Modern CFO

Dimitri Raziev24 Mar 20225 mins

The modern CFO does not sit in the back office anymore crunching numbers. The CFO now is the business leader, who thinks about the company strategy together with the CEO. What is the rule book for a present-day CFO?

The CFO role has undergone a major revolution in the past decades. A modern CFO is not only responsible for the accounting processes and compliance anymore with 85% of CFOs stating that their role has become more versatile. The contemporary CFO is now also responsible for the strategy, direction of the company, and many internal processes. The Deloitte refers to four faces of a CFO– a Strategist, Catalyst, Operator, and a Steward. Sometimes it is hard to navigate throughout various duties of a CFO, so we have prepared an actionable guide with three key things a CFO must embrace and three things to avoid.

3 Things a Modern CFO Must Do

CFO to Do 1: Data Monitoring

The modern finance team does not prepare the financial statements and invoices anymore. The scope of responsibilities is now involving more strategic tasks, as the tools are automated and data is interconnected between various departments thanks to ERPs. As the manual tasks are now minimized, the modern CFO has more time to focus on important data analysis.

The data is king, and there is an ocean of data produced by various departments. It is a waste not to use the data so conveniently gathered and visualized by modern technology. Moreover, there are tools designed especially for the finance department, like Kolleno cloud-based Account Receivables software extension. The user-friendly dashboard is capable to prepare the reports and visualising the liquidity ratios and other vital information for a finance team. This way the CFO can get access to the data analysis to empower strategic decisions.

The KPMG survey “View from the Top” has revealed that 85% of CEOs believe that financial data analysis to achieve profitable growth is the most valuable strategic insight a CFO can bring.

CFO to Do 2: Monitor the Technology and Automate as Much as Possible

The modern CFO should never stand still and know the latest developments in the tech arena that might help to increase the efficiency of the business. This is relevant only to the tools that the financial team is using but also to the technology that is more relevant for other teams. After all, if the CFO can’t assess the usefulness of the new technology, how he or she will be able to judge if the expenditure is worth it or not.

Moreover, the automation of manual processes in the finance department is key to eliminating errors and keeping up with the growth. Last but not least, automation keeps workers motivated. The repetitive tasks are daunting and are a major cause why employees leave. CFOs must ensure that talented financial analysts have an interesting and challenging task, and this means reducing repetitive tasks that can be performed by technology. Besides, according to the KPMG survey, the CFOs need to work on retaining talented analysts. Only 33% of CEOs approve the talent management of their CFOs.

CFO to Do 3: Dive deep into the Company’s Operations

The CFO is very often a gatekeeper in many departments’ decisions. So, it is important to understand how different business units work and to monitor operational KPIs.The work of the CFO doesn’t end up on the spreadsheets. Especially when the company is a start-up, or scaling its operations, the CFO has to be on top of different things and understand the work of various departments, or geographies if the business has a footprint internationally.

Thanks to the ERP systems the CFO can see the whole scope of operations from supply chain to sales. Understanding these internal processes helps CFO to make the decisions that will enable the growth of the business. When the sales are growing, which is great for the expansion, make sure to accommodate the increasing number of customers. The cheapest and most convenient way to excel the enlargement is to automate the Accounts Receivable. 

3 Things a Modern CFO Must Avoid

CFO not to do 1: Unrealistic Cost-Cutting Targets

Saving money, especially during the economic downturn is one of the key responsibilities of a modern CFO. However, when rolling back the expenditure, it is important to set feasible targets. According to the Gartner research, only 43% of companies achieve the cost-cutting goals. The staff and the shareholders might feel demotivated that the business is not on the right track. Moreover, not being able to meet the saving targets indicates that the priorities are not feasible and it is better to focus on other areas that are more likely to save the company money.

CFO not to do 2: Do not Save at the Expense of Growth

The crisis times require a swift reaction from a CFO in terms of saving decisions. However, it is important to identify the cost-cutting areas that will not harm or stall the possible growth. The budgeting should avoid making saving and growth a trade-off. It is vital to identify expenditures that is supporting sales. Furthermore, some areas especially during the crisis might require more expenditure. For example, during the COVID-19 pandemic, 69% of companies accelerated their digital business initiatives.

The higher spending on digital transformation, in this case, helps the companies to overcome the disruption caused by the lockdowns. Besides, these strategic decisions make the businesses fitter for future growth, become more innovative, and gain a competitive advantage.

CFO not to Do 3: Sending out the Invoices Late

This might sound like a microtask when compared to important strategic decisions, but it can have a major impact on the internal liquidity of the business. The late payments from clients have always been a major threat to SMEs ’ cash flow. During the pandemic, the probability of getting paid late increased to more than 50%. Fixing this problem requires a complex approach. Sending the invoice right after the sales department confirms an order is already a big leap forward.

Nonetheless, sending invoices can become laborious, especially when the sales are growing. Automating this task is simple with Kolleno invoicing capabilities. Our acting software extension will not only prepare to send out the invoices immediately but also will follow up the late payments using the in-house proprietary machine learning technology.