The role of the Chief Financial Officer (CFO) in a business has not been around for a long time, with the first companies appointing hires to the role in the 1960s. People whose job it was to manage a company’s financial actions, track cash flow and provide financial analysis and planning.
But in the last five years, the CFO’s remit has evolved with many officers taking on responsibilities that were once the concern of other individuals in the organization. Now that the Covid-19 pandemic has instigated significant changes throughout the corporate world and that we are living through a shortening boom-bust cycle, the time is right to explore what it really means to be a CFO in this day and age and what skills are needed to tackle the role.
What are today’s CFOs expected to do?
Astute financial understanding is the core skill a CFO must possess, but the modern-day CFO needs more than this to carry out his or her job efficiently in 2021. Anyone hiring for the position will be seeking individuals with real business insight and technical understanding, especially because technology is changing faster than ever before, and a CFO needs to be able to keep up.
Knowledge of banking investment is no longer enough. A CFO must understand the changing face of the payments industry, how different solutions work, what is best for the industry in which they are employed, and how to implement new technologies with minimum disruption and inconvenience.
One ‘techie’ example is the application of Sage ERP, where the CFO must understand operating not just in one entity but via multiple operations, departments, currencies, and in different jurisdictions and tax systems. The CFO must also be mindful of the threats posed by hacking/data protection, etc., and have a firm grasp of cloud technology and how it can be used to channel growth and reduce business overheads.
CFOs often need to work with developers. They must be able to understand every aspect of the developers’ proposals and how they will impact the business. He or she will work alongside the CTO, but technological understanding is still a must.
The emphasis on operations
The modern-day CFO will be expected to play a part in operations. In a high-growth technology business, such as FoodHub, where we employ more than 800 members of staff, CFOs are often involved in operational problems that relate to human resources, marketing, legal compliance, etc. Therefore, we need to be actively involved so that we can push for efficiencies and cost-cutting and in the implementation of new business policies and procedures.
Why has the role changed?
Necessity has brought about the shift, technology, particularly, an influence on the change as operating models become increasingly more complex.
Environmental factors such as the global economic downturn of 2009 resulted in CFOs firefighting. The boom-and-bust cycle shortened and has continued to do so ever since—current estimates putting the cycle at eight years and that time reducing too. The 21st century CFO needs the ability to strategize and plan for diversification in such times.
Of course, the biggest disrupter of the 21st century so far is Covid-19, and it too will have an impact on the role of the CFO. It doesn’t just mean planning for stock control but working out whether and how a business deals with further lockdowns and if there is any way to accelerate growth in these constrained times.
The best-case scenarios estimate that Covid-19 will have an impact on businesses for the next three years. More, even. A company’s survival depends on the actions of its CFO right now.
The CFO must pull on that forward planning hat to prepare not just for the repercussions of the pandemic, but for the next big disruptor, what that might feasibly be and how the business can survive it.
What is the future for CFOs?
Based on my own experiences, I expect the role of the CFO to continue to expand its need for further skills/understanding. The skills needed in C-level roles will continue to overlap. The successful CFO of the 2020s will need to adapt and learn quickly in order to make the businesses they work in viable and successful.
About the Author: Mohamed A Chaudry - Group Chief Financial Officer Group Chief Financial Officer and Growth Accelerator at FoodHub, Mohamed gained experience across a range of sectors before finding his niche in the food industry. FCCA qualified with an MBA and extensive knowledge of corporate finance in the SME arena, he has worked with numerous multi-million-pound businesses, often starting small and helping SMEs to grow into their full potential. With in-depth understanding of every stage of company expansion including strategy, corporate finance advisory, M&A transactions, financial planning, due diligence & valuations, cost controls, cash management and raising funding, Mohamed is a flexible and analytical financial leader with genuine industry insight.