CFO: Driver of Growth and Innovation
You are the CFO of an organisation. You have always done this role but what has changed are the trends in your industry. You are not quite sure exactly what your role is or how to be agile in this constantly changing environment. How do you keep up with what is happening in your industry and still maintain your traditional role as the Chief Financial Officer? It is a question that plagues many CFOs. This article aims to answer this question. How to be a modern CFO.
Embrace new technology
Technology has changed the world in so many different ways and jobs have forever been altered. It has particularly changed the way that businesses function. The Internet has connected the world like never before and companies have been quick to realise the advantages that this brings. By embracing new technology, you will be able to continue to grow and differentiate your business from its competition.
Technology doesn’t just benefit your business. For example, Human Resources have benefited greatly from technology. The ability to easily search and collate data means that HR can have better informed hiring decisions. Information sharing has also meant that people are able to work where they want and whenever they want. This has significantly reduced the time people spend travelling.
Technology has meant that businesses can function better than they have before. According to McKinsey, businesses who have invested in their infrastructure are 3 times as likely to grow as those who haven’t.
How can technology help your business?
Technology is a double-edged sword, Adopting the right technology can give a huge advantage to an organisation at the same time the wrong one can put its existence in jeopardy.
The right technology can make an organisation efficient and productive in its activities, it can also effectively manage the activities of all its members. The wrong technology can make a huge difference to an organisation’s performance and ultimately its survival.
The key here is to choose the correct technology for the job and apply it with effective management of its use.
Adapt your accounting software
New technology has provided finance departments with new ways to think about management accounts. In the past, a CFO’s management accounts included financial information about what the business has done, what it has been able to do. Now with the new technology available, management accounts have expanded. They now include information that can determine the health of a business. This information helps CFOs make more informed and forward-looking decisions.
When CFOs have access to better information, they are able to make better decisions. This impacts the whole business. Better management of accounts mean that your company is able to grow and survive the test of time.
Move on from Excel
One area where technology has made a huge difference is accounting. New technology allows finance departments to record transactions and record them from all sources. They can then collate the data and get an overall view of their companies.
Not only does this save time, but it increases quality. The data is more thorough and it is easier to spot trends. Companies like KashFlow have provided finance departments with tools that allow users to create their own management accounts.
Think creatively
There are a number of ways to change and adapt the finance department. One of the ways is to change the roles and responsibilities of the finance department. Think creatively about what your finance department does. What additional tasks can your finance department take on? How can your finance department work more effectively?
Try to break down your finance department into a core group of people who focus on your core finances. From there, create a separate group of people who focus on your operational management. This frees up the core finance department to focus on the strategy, finance and helping the business achieve its growth.
Focus on your people
Technology has an impact on the finance department but it is the people that change the finance department. Make sure that your finance department has the skills and tools to continue changing and developing. Human resources can help the finance department develop. The finance department itself can make sure they have a good communications system so that everyone knows what is going on.
Communication with your staff is very important as it can also ensure that you are aware of what information your staff need. If the staff do not know what information they need, how should it be provided?
Over the last couple of years, hiring has become easier. Software such as JobStack helps HR departments to identify the right candidate for any job. It tracks applicants through the entire process and lets you know when somebody is still looking. It lets you know when someone has had an interview and what the next steps are. This saves your HR department a lot of time and allows them to put their efforts into other more important aspects of their job.
Decide what you want to do
Today, the role of the Chief Financial Officer has changed. CFOs need to be flexible to adapt to the changing demands of the market. The role of the CFO has changed from being just finance orientated to also being a decision making role. The role of the CFO has changed from being just numbers orientated to being a decision making role. The CFO needs to be able to deal with a wide range of issues that could affect the business, not just finance. The CFO needs to be able to deal with the wider strategic aspects of the business and use their skills to make decisions that are beneficial to the company.
The CFO needs to be forward-looking.
They need to be able to drive change and innovation. Technology has changed the way that finance departments run. CFOs need to run their departments in a similar way or risk falling behind. Technology has also allowed finance departments to grow and allows them to provide better information to the rest of the business. Technology has allowed CFOs to be flexible and reactive to change. Without these modern tools, the role of the CFO is in jeopardy.
What is the CFO’s role in the growth of the organisation?
As the Chief Financial Officer, you will be instrumental in helping the company thrive. That means you need to make sure your department is focused on the right metrics and reports which drive the right actions and make more revenue. CFO has to play a role of a strategic leader in leading the organisation in the right direction , so the organisation can become more successful and profitable.
Here are 10 ways that your CFO can help generate more revenue.
1. Ensure the company targets
Make sure the CFO is informed about the company’s short and long-term goals. The goals must be achievable and realistic. You should inform the CFO about the progress of the goals on a regular basis and make sure that the goals are measurable. The company goals can be measured by CEO’s monthly sales reports or by indicators such as ROI and profit.
2. Provide access to financials
The CFO must be well-informed about the financials of your company. The CFO can keep track of the company’s revenue and expenses and review the numbers on a monthly basis. Based on the financial information, the CFO will advise the CEO on ways to reduce costs or increase revenue. The CFO can also provide the CEO with reports and information which will help the CEO to make better decisions.
3. Decide whether the investment is right
If the CFO is worried about a potential investment, then it is the responsibility of the CFO to advice the CEO on whether the investment is right or not.
4. Make sure financial controls are being followed
As a CFO, you must monitor the cash flow of your company and ensure that the financial controls are being followed. The CFO must guide the CEO through the capital requirements and review the financial documents. As a CFO, you must make sure that the financial documents are correct and up to date. You should also make sure the financial documents are being reviewed on a regular basis.
5. Monitor working capital requirements
As the CFO, you must ensure that the company’s working capital is being handled properly. As most companies have high working capital requirements, you need to monitor the working capital to make sure that the company is generating enough cash.
6. Increase cash flow
As the company CFO, you must make sure that the company’s cash flow is increasing. Cash flow is an indicator of how well the company is doing. CFO can use the cash flow information to evaluate the performance of the company. Also, the CFO can initiate measures that will improve the cash flow of the company.
7. Report financial status of competitors
As a CFO, you can analyze the financial status of the competitors and report it to the CEO. The CEO can use a competitor’s financial data to evaluate the financial position of other companies in the industry. Also, the CFO can advise the CEO on which companies are performing well in the market.
8. Analyze the company’s balance sheet
As the CFO, you must analyze the balance sheets of the company. The balance sheet is the main source of financial information for the company. The balance sheet provides information about the company’s financial strength.
9. Set and monitor targets
The CFO is responsible for setting the targets and monitoring the performance of the company. The CFO must review the targets with the CEO on a regular basis. The CFO can review the sales reports and track the progress of the goals on a regular basis.
10. Help the CEO take the right decisions
As the CFO, you must guide the CEO to make the right decisions for the company. If the CEO needs advice from the CFO, the CFO must guide the CEO. The CFO can also suggest ways to improve the company’s revenues. As a CFO, you must ensure that the company is doing well and making profits.
Final Thoughts
In conclusion, the CFO can be a driver of growth and innovation by taking on new challenges and opportunities, being open to change, and being a leader in the organization. By taking these steps, the CFO can help the organization achieve its goals and continue to grow and innovate. By doing so, they can help to ensure that the company remains competitive in today’s rapidly changing marketplace.
Can be reached via email – 01prashanth@gmail.com or a private message on LinkedIn if you would like to discuss this topic further.
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