As finance professionals often do, you aspire to become a CFO one day. And you wonder what it would take to bag the role of your dreams. Today, you get your answers.
It’s an exciting time to be working in finance. CFOs are re-inventing themselves, trying to master automation and spearhead business strategy. CFOs are juggling their new responsibilities and this means that future finance talent will have to develop a unique skill set; inquisitiveness and interpersonal skills will be as crucial as number-crunching and tax filing.
According to a Mckinsey report, CFOs spend 41% of their time on non-finance activities. As we step into 2022, that number might well be higher. It’s crucial to be aware of the changing landscape and set sail according to the new tides.
As aspiring Chief Financial Officers, your next career jump shouldn’t be a leap of faith but a sure-footed step of conviction. In this blog, you’ll learn the roles and responsibilities of a CFO and how you can climb the next rung of the corporate ladder and grab the promotion that you deserve.
Roles and Responsibilities: A Day in the Life of a CFO
CFOs work closely with other C-suite leaders and report to the Chief Executive Officer (CEO). The CFO holds in their hands the financial well-being of the entire company. Their days are long and hard, and their responsibilities are constantly evolving.
Here are the key responsibilities of a CFO:
- Balancing budgets and expenses
- Overseeing financial planning & analysis (FP&A)
- Heading tax & compliance
- Raising capital and pitching strategic M&A
- Minimizing financial risks and losses
- Managing investor relations
- Championing automation
1. Balancing Budgets and Expenses
As the head of finance, this is a primary responsibility for the CFO of a company. While they may not be closing the account books, it falls on them to think about big-picture expenses and how you should allocate the company’s budget.
“As you mature, budgets become a tool in trying to be accurate in the profitability and revenue growth you deliver because that’s critical to your success in public markets” – Mike Beach, CFO at Chargebee.
The scope of budgeting can be more than cutting costs and regulating cash flow. It can be about identifying company initiatives that align with the organization’s long-term goals, assessing their capacity for returns, and ensuring these are funded at a granular level.
2. Overseeing Financial Planning & Analysis (FP&A)
Financial planning & analysis is a branch of the finance function that analyses a company’s financials and forecasts reports based on previous numbers. This data is often used to back major executive decisions of C-suite leaders.
The FP&A team perform qualitative and quantitative analysis of the company’s financials and measure the progress of the company’s goals. The CFO directly oversees the FP&A team and is instrumental in charting financial strategies for the company’s future.
3. Heading Tax and Compliance
In the digital economy, all companies are global. This brings a list of tax laws and compliance regulations that allow your organization to operate in all markets with the same ease.
Staying on top of tax and compliance isn’t just good governance; it’s also future-proofing your business.
“You’ve got to look at compliance in terms of your company’s future and not just focus solely on the past. Do you want to expand globally, and will you be able to do that with everything as it is now or as it has been?” – Tony Ricciardella
When compliance is proactive rather than reactive, you enable your company to grow faster instead of having compliance as the last annoyance to cross off a checklist.
Related Read: The Complete SaaS Compliance Checklist for 2022
4. Raising Capital and Pitching Strategic M&A
As a business matures, fundraising becomes a critical role of the CFO.
“The responsibility of the CFO is not just the fundraising itself – it’s also how they want to structure it. Do they want to raise equity or debt? Do they want to bootstrap? What kind of capital structure is best for the company going forward?” – Karime Mimoun, Head of Controlling at TIER Mobility. (Source)
The CFO’s approach to raising capital depends on the stage of growth the company is in. They need to ensure they have the funds to execute current business plans while proactively raising funds that could accelerate your plans.
Apart from fundraising, the CFO plays a significant role in advising the CFO on strategic acquisitions that will help the company scale across markets and product offerings. The CFO identifies profitable acquisitions that work well within a company’s ecosystem while adding to its value proposition.
5. Minimizing financial risks and losses
Identifying financial risks within the company’s processes is a critical job and has a significant impact on the company’s bottom line. The CFO has a cross-functional view of the entire organization and has the perfect vantage point to identify risks and loose ends. Risk management could optimize an error-prone process or automate compliance to avoid paying substantial slip-up fees.
Related Read: Automate Your Compliance Woes Away
6. Managing investor relations
The CFO combines their finance, communication, and marketing skills to set and manage the stakeholders’ expectations across the board. Maintaining strong and transparent relationships with its investors is crucial to its continued success. As the head of finance, the CFO plays a direct role in engaging with the investor community and building long-term credibility for the company’s brand.
7. Championing Automation
With technology disrupting industries every day, finance is no exception. CFOs need to leverage technology to accelerate growth and scale seamlessly in the competitive landscape of fast-growing businesses. It can also be a critical tool to reduce friction and lower costs. And that’s why CFOs are looking to future-proof their business. A robust tech stack is their best friend.
An Accenture report estimates that you can automate 60 to 80 percent of backward-looking accounting activity with minimal human intervention. You needn’t use automation just to reduce errors or remove bottlenecks. It can also free up valuable time for your resources, letting them focus on more strategic initiatives.
Related Read: The Strategic Toolkit for Modern CFOs
What are the Skills Needed to Become a CFO?
As the job description of the CFO role evolves, the skillset it demands evolves accordingly. Saying a C-Suite leadership position requires decision-making and leadership skills is a little on the nose. Not to mention the extensive financial management skills that the CFO role demands. While a CFO will lead the finance function and should possess the vision to build and scale a team, he’s also so much more than just a leader.
“The simple truth is that the CFO is now a primary decision-maker, thought leader, and voice of reason,” according to the Grant Thornton report.
Here are some less obvious but more critical skills that modern CFOs need.
Communication Skills: What sets a good CFO apart from a good finance professional is their ability to translate what the numbers mean into language appropriate for the audience he’s talking to, whether it’s employees or investors.
Tech-savviness: The role of technology in the growth journeys of businesses is no longer a questionable one. Fast-growing companies need a CFO who’s excited about the value addition that technology brings and actively seeks ways to optimize internal processes with automation.
Future-readiness: A forward-looking CFO is strategic in his thinking. Rather than putting out fires, they’re thinking about ways to future-proof the processes within the organization. As business partners, CFOs need to plan for growth – whether automating compliance or rethinking competencies for promotion within their team.
Risk assessment skills: As the strategic advisor to the CEO, CFOs will have to weigh in with their opinions on whether an initiative is financially prudent. Then, CFOs must weigh the potential risks against their value to the shareholders and the company. While scaling businesses stand to benefit mainly from CFOs who are aggressively passionate about growth, a CFO who puts their foot down at a critical time can be a valuable asset to any organization.
What is a Typical Career Path for a Chief Financial Officer?
There are several different paths one can take to reach the CFO position. The CFO job requires extensive financial knowledge, so naturally, a bachelor’s degree or master’s degree in accounting or a finance-related field is mandatory. Some might also opt for a Master of Business Administration (MBA Program). A CPA (Certified Public Accountant), a Certified Management Consultant (CMA), and a Chartered Financial Analyst (CFA) are popular certifications among aspiring CFOs.
Some might begin their career as an auditor, financial analyst, or accounting department. Scoring a job at one of the ‘Big 4’ accounting firms (Deloitte, Ernst & Young, PricewaterhouseCoopers (PwC), and Klynveld Peat Marwick Goerdeler (KPMG)) is often seen as a great start to a career in finance.
A full-time entry-level job allows you to get a close look at how a company operates and helps you test your number-crunching skills with real-world scenarios. As you climb the corporate ladder, you start viewing the company from a big picture perspective as you take on more responsibilities.
Since finance is an integral part of all businesses, finance professionals can work in any sector. While the fundamentals of finance are the same everywhere, sticking to one industry will give you a competitive edge as you learn more industry-specific skills the longer you stay in one.
There is no one yellow brick road to CFO-dom. CFOs come from different industries’ academic backgrounds, with a varying number of years of experience and often a unique amalgamation of technical skills they’ve acquired on their way. According to a Robert Half survey, on average, CFOs have nine years of experience in accounting and finance before becoming a CFO and have been employed by three different companies.
Whether you’re a straight shooter or you take the scenic route, whether you work with private companies or public ones, all the work experiences you gain along the way add veritable contributions to your finance career.
So What Makes a Great CFO?
The CFO role is going through a historic transformation. The job description’s evolving, and CFOs are playing not just a more strategic but a more central role in their organization’s growth.
As finance continues to barrel persistently towards automation and digital transformation, CFOs who can envision and champion change become more favorable. And those who fail to look ahead are left behind.
“The ultimate question is what can CFOs do today to future-proof the finance function for tomorrow.”
– Krish Subramaniam, CEO, and Founder of Chargebee (source)
The role of finance within an organization has grown into something more significant than a back-office accounting team. Modern CFOs are now also Chief Growth Officers and Chief Automation Officers.
The future’s exciting. What kind of CFO are you going to be?