New Role of the CFO
The traditional role of CFO is going beyond reporting. CFOs are now responsible for more departments (such as IT and procurement for example), digital transformations and ESG (environmental, social, and corporate governance). With the expansion of the CFO position investors are having to be more aware that resources and talents of CFOs are needed in organizations.
With more roles being reported to the CFO, some organizations have divided the position into two staff members. For example, one staff member is handling the extreme specialization where they are solely focusing on the accounting, budgeting, and forecasting. The other staff member is a decision- enablement role. An example of this is the head of FP & A acts as a counselor to business units. Other functions such as procurement, IT and real estate sometimes have their own leaders who report to the CFO.
Another evolvement of the CFO role is digitization. Some core processes, such as payables and receivables have largely adopted digital. Forward- looking tasks such as demand forecasting or cash- flow planning is headed to digitization. Eventually inventory management will be critically important in the next 8-12 months given all the supply chain disruptions we see globally. CFOs should also spend more time leading non-core finance activities such as developing employee capabilities and role-modeling new mindsets and behaviors.
CFOs want to actively shape ESG programs and better align them with strategy, finance and how topics such as climate or social issues integrate with the company’s overall direction. There is a 20% – 30% higher alignment with strategic goals when CFOs are actively engaged in ESG topics.
This time of change represents an opportunity for the CFO to have massive impact, becoming almost a copilot of the business with the CEO. Personally, I am excited about what is ahead for the new role for the CFO. For the sake of my own kids and their kids, I think it’s important that CFOs play an important role in shaping their respective companies’ future.
