How Today’s CFO Plays a Critical Role in Driving Transformation

The modern CFO is a forward-thinking, strategic player that knows how to generate value. They play a critical role in supporting business growth, partnering with the CEO for context that drives financial choices.?

How is the Role of the CFO Changing?

The function of the CFO is evolving due to macroeconomics, changing expectations, and the emergence of new technologies. Outside influences include:

• Advancements in technology
• Evolving expectations
• Rising costs and inflation
• Shifting business landscapes

Like a Swiss Army knife, the CFO is a multifaceted finance leader, offering a variety of skills related to data analytics, strategic decision-making, relationship management, and risk assessment.?

A few of the ways in which the role has evolved include:

• Risk Management: Risk assessments, data privacy, compliance, and cybersecurity, as well as managing relationships with auditors and regulators.
• Emerging Technologies: CFOs must understand AI, ML, and automation to enhance forecasting, analysis, and operational efficiency.
• Investor Relations: Communicating growth strategies, financial performance, and investment opportunities to analysts, shareholders, and investors.
• Sustainability and ESG: Evaluating the impact of sustainability initiatives and incorporating ESG metrics into reporting.
• Business Partnering: Partnering with sales, marketing, and operations to better align business objectives, drive operational efficiency, and optimize resources.?

In addition to evolving responsibilities, the challenges a CFO faces are also changing.

What are the Biggest Challenges for a Modern CFO?

As the economic landscape continues to shift, CFOs face obstacles like:

Balancing Growth and Profitability

CFOs are dealing with larger volumes of work. They are tasked with finding the right balance between maintaining profitability and driving growth. CFOs must effectively allocate resources, monitor performance, and assess investment opportunities, to ensure sustainable growth.

Siloed Finance Teams

Finance teams are hyper-focused, which leaves them out on their own island. They often fall short of mastering the language of the rest of the business, including operational KPIs and important metrics.

Stakeholder Buy-In

Adopting new technology can freeze up time for CFOs, which makes some reluctant to change. There is an enablement issue here, and while most finance teams love to architect the process of automation, they’re the last ones in the office to fit the machine.

Changing Expectations

Organizations expect finance teams to access KPIs, master them, and use these metrics to engage with key stakeholders. They want to know about the drivers behind revenue, not just the numbers themselves.

Navigating these new challenges requires CFOs that are agile, adaptive, and proactive in leveraging data, collaborating across functions, and embracing new platforms. A CFO must adopt a strategic mindset that supports growth and drives productivity.

What are the Top Solutions for Today’s CFO?

A progressive CFO will work to comprehend the economics for each unit of growth, as well as the levers of change. This requires cross-functional engagement with teams and solutions like:

Embracing Technology

CFOs must leverage integrated, cloud-based technology that combines multiple functions like accounting, reporting, financial planning, and expense management. They should be open to the following:

• Automation Tools: CFOs automate workflows for everything from AP to expense management and financial reporting.
• Cloud-Based Platforms: Systems that are flexible, scalable, and can be accessed from anywhere in the world, at any time.?
• Data Analytics: Helps a CFO identify trends, forecast scenarios, and drive data-based decision-making.?

Collective Forecasting

The CFO can forecast one of two ways. They either speak to different functional leaders, and then bake that into the budget, or they leverage an in-house economist. Both means require listening, engagement, and collaboration with other parties. They must be open to fostering a strong culture of collaboration across all functions within the organization

Strategic Partnerships

CFOs should always partner with external service providers, consultants, tech vendors, or any other expert needed to get the job done right.?

A modern CFO must prioritize effective engagement and communication with stakeholders, including board members, investors, regulators, and internal teams. Timely and transparent communication will build trust, demonstrate leadership, and align expectations.

ESG Considerations

CFOs must incorporate sustainability considerations into decision-making and reporting. This includes assessing ESG opportunities and risks, setting targets for sustainability, and reporting on ESG performance to stakeholders.

The CFO of the Future

There are many trends happening now, that can provide insight into what the office of the CFO will look like in the next 5-10 years.

From Cost Center to Driver of Business

Organizations are looking to digitize, inevitably turning finance into a profit center. It’s an opportunity to make more money and capitalize on how you're spending money.

Evolving Technologies

Artificial intelligence and machine learning can help the CFO in a variety of ways, including:

• Operational logistics: Automated decision-making in AP and billing
• Benchmarking: Data for customers on the best pricing model, trends, etc.
• Predictive analytics: AI model that predicts whether a request will be approved
• Machine learning: Best for forecasting, flash reporting, and classifications

AI can also enhance the tools you already have, and make them more performative.

Summing it Up

Leading a company’s digital transformation is one of the hardest areas for a CFO to achieve success. The office of the CFO is the key to unlocking data-driven insights that lead to more informed decision-making and accurate forecasting.?

This is why finance teams are slowly converting from cost centers to drivers of growth. There is an inherent value that lies within the job of the CFO—and a money-making one at that.

The CFO office is one of the last frontiers for digital transformation. Don’t white-knuckle the ride. Get prepared. It’s not about automating the entire process. It’s about taking a human-centric approach and using the best tools to get the job done.