5 Things You Should Be Getting from Your CFO
CEOs get a lot of attention. But the underrated heart of many organizations is the chief financial officer, who plays a pivotal role in ensuring a company remains on the right track when it comes to making and spending money.
However, top-tier CFOs also contribute more than just traditional financial management. Let’s take a closer look at the finer points of the position.
Are You Getting These 5 Things from Your CFO?
While every organization is different, companies everywhere should consider the following potential contributions when sizing up a current or future CFO.
1. Strategic Financial Planning and Analysis
As the company’s top financial leader, great CFOs develop excellent collaborative relationships with others on the executive team, like the chief executive officer and chief operating officer. This is vital for working together on long-term financial strategies, which often requires balancing the needs of different stakeholders and departments in the organization.
On their own, CFOs should also be involved in an ongoing, thorough financial analysis of the company, using their expertise to identify opportunities and warn about unaddressed risks.
In both cases, effective chief financial officers provide insights and recommendations to help others in the organization make informed decisions.
2. Transparent and Accurate Financial Reporting
It’s not the most glamorous part of running a business, but compliance and financial reporting are undoubtedly the most important. Whether they’re part of a large public company or a small business with a few investors, CFOs ensure accounting standards and practices are followed.
In addition, they’re responsible for:
- Producing timely, accurate financial reports for stakeholders inside and outside the company, which often form the basis for critical business or investment decisions.
- Supervising any financial, regulatory, or tax filings, which is an unpleasant but necessary part of continuing operations.
- Communicating and using their expertise to translate complex concepts in a clear and understandable way.
3. Risk Management and Internal Controls
The CFO is also the last line of defense for any internal financial issues. Top performers implement robust internal controls to safeguard the company’s assets, ensuring waste is kept to a minimum and valuable investments or equipment are protected.
Additionally, they should be proactive in identifying and addressing potential financial risks or vulnerabilities, solving problems before they even materialize. This is one area where experience can be particularly valuable.
Seasoned CFOs can look both back at results and forward to future goals when setting contingency measures and helping with strategic planning.
4. Cost Management and Efficiency
Keeping costs down and using time and money in the best ways possible are vital skills for a chief financial officer. They should lead periodic reviews of expenses and cost structures, looking for ways to optimize.
While any CFO can save money by cutting services or investments to the bone, only the best can find ideal cost-saving opportunities that don’t compromise the quality that customers rely on. This requires an intimate knowledge of the business and its clients, as does implementing measures to improve efficiency.
Top CFOs help transform their companies into lean, mean, efficient machines.
5. Capital Allocation and Investment Strategy
While all CFOs work to keep the lights on today, high-quality ones also look to the future.
They and their teams take time out of the daily grind to assess investment opportunities and look at capital allocation decisions in both the short and long term. Striking a balance between the two is vital, but skilled CFOs provide the guidance necessary to take care of today’s needs while setting the organization up for success in the future.
As part of broader executive teams, the CFO should also focus on evaluating the ROI of various programs or projects and provide their perspective on significant strategic investment decisions.
Bonus Point: Financial Leadership and Team Development
Companies with CFOs that provide the previous five tips should count themselves lucky. But chief financial officers can further distinguish themselves by serving as true leaders to their teams.
- Starting at the top, they can promote a culture of accountability and continuous improvement, which inspires team members to perform at their best.
- They should be available to their teams, ready to both give and receive feedback on ways to improve.
- Top-tier CFOs also remember to foster professional growth within the finance department, helping develop the company’s next generation of leaders with the same valuable principles.
Get the Right Things from Your CFO
Finding a proactive, strategic, and forward-thinking CFO is one of the best things a company can do to set itself up for success.
Keep these five crucial skills and responsibilities (plus the bonus point) in mind when assessing any chief financial officer or candidate for this essential role:
- Strategic financial planning and analysis
- Transparent and accurate financial reporting
- Risk management and internal controls
- Cost management and efficiency
- Capital allocation and investments
- Financial leadership and team development
Need a CFO that provides these things? Reach out to PlotPath today to learn more about how we can help.