Today's chief financial officers are as different from the bean counters of the 1970s as apples are from oranges.
In an operating environment characterized by continued uncertainty and macro-shifts, modern CFOs must adapt quickly to the new world of business reality.
“As growth trajectories change and we return to the balancing act of achieving plan while also understanding a realistic view of growth, the role of the CFO naturally increases.” provi CFO kevin price spoke to PYMNTS for the series A day in the life of a CFO.
“Part of the CFO's hard work is understanding the organization's growth wants and needs and putting them into a financial basket that makes sense, so you can plan and commit resources to them.” Price explained.
He added that the CFO's role is now “much more interesting” and more at the cutting edge of the business than in the high-growth era, when CFOs had to “live their lives.”
A fundamental truth in doing business is that companies must adjust their strategies based on both external and internal conditions. As growth trajectories shift from the era of cheap capital and pre-pandemic economic boom, CFOs are now more important in balancing realistic growth expectations with the pursuit of profitability. These two modern roles stand in stark contrast to the growth-at-all-costs mentality of the past decade. .
The importance of analytical and operational approaches for CFOs
Price said one of the most important changes in the CFO role is the shift to operational leadership and financial partnership. This change requires CFOs to better understand the business, empathize with their teams, and work collaboratively across functions.
“The role has become more operational than before,” Price said, highlighting the evolution from bookkeeping to integrated strategic planning and execution.
This change will not only make the CFO's job more interesting, but also more difficult, requiring a blend of financial and operational acumen.
“CFOs need to understand the business, not just model and visualize it. They also need to work with the team as a partner, not just a bookkeeper who keeps things on track,” he says. said. “There is a lot more financial partnership and analytical leadership that finance departments are providing today.”
As the financial leadership landscape changes, so too will the way other members of the executive leadership team work together.
“Once a business reaches a certain size, cadence, consistent communication, consistent reporting, and consistent KPIs all become very important,” Price said. “A lot of that is because things are changing so quickly…you don’t want to be six months late.”
Whether it's verbal communication or a PowerPoint or Excel model, “things need to be clear and consistent, and people need to understand immediately what they're looking at.” he added.
Chief Reality Officer as CFO
With a clear, holistic view of the organization, CFOs are now well-positioned to provide the truth and reality setting that is the currency of the finance function's role.
“I'm all about optimism, and I don't want our finance team or any other finance team to become naysayers and police…but we also need to be realistic,” Price said. .
What this looks like in practice, he said, is either “investing ahead of the curve” with growth in mind, or “investing along the curve or ideally behind the curve.” It was explained that it was one of two things. Required resources, technology, and talent. ”
“I like to think of the finance team as an analytical support model,” he said. “So if you're the head of commercial, the head of sales, the head of human resources, the head of operations, it's important to have a partner working alongside you to help you analyze and build a plan. Execute your vision and put validation and rigor behind it… If you want to present a plan, you must have already gone through alignment with your finance team and we will jointly present When things are working properly, we are firmly embedded in the organization.”
“That's what I mean by sitting in the corner of the room and measuring and saying when it's running and when it's off,” he added.
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