It's a great time to have a good CFO and a terrible time to have a lousy CFO. Chief Financial Officers and other top finance people are being asked to do more than ever before.
In a previous article, I wrote about the mutation of the business controllers. There is more: they are no longer finance people. They've got to have all the traditional finance skills. Still, they also need to know the business intimately and deeply understand the value drivers.
With the CEO, the CFO needs to know the right business questions to be asked.
Definitively, organizations need stronger people- or at least having financial management skills in the team.
The qualities of a strong CFO
The breath of the job is impressive. It would be best to have the full range of financial skills - control, treasury, risk management, customer valuation, and the strategic skills to be a complete business partner with the CEO.
The job will not get any easier. It's going to be more demanding from every single aspect. CFOs have to have passion and tremendous energy to do the job, beyond financials.
Corporate Performance Management and CFOs
According to Gartner, Corporate Performance Management has three pillars: business planning, dashboarding, and business intelligence. Those are three interlinked capabilities.
- Business planning to drive the performance;
- Dashboarding to monitor performances against plans;
- Business intelligence to report and analyze issues for maximum effectiveness.
In our vision, the SME business owner - thanks to the CFO - should reach out to the entire organization and engage each people in the performance management cycle: planning, budgeting, forecasting, dashboarding, analysis and reporting.
The result is that everyone understands the business goals, executes the plan to achieve them, and measure and manage the actual performance.
Planning and budgeting should be on the shortlist of CFOs. Business owners will ask more substantial questions like:
- Where's the business going?
- Do we have a credible plan for getting there?
- How confident can I be that we could quickly correct course if things change?
- These are all planning questions any CFO must be able to answer instantaneously.
Something your CFO should implement immediately: Rolling Forecasting
I wrote it: the CFO must focus on planning and forecasting. Rolling forecasts are a must.
Rolling forecasts equal more brilliant performances. Unplanned events like strikes, pandemics, recalls can shred even the most-well-crafted plans.
Suppose you have practice and discipline at recasting the plan in the regular course of business. In that case, you can switch into that mode very quickly when the unexpected happens.
This becomes a competitive advantage: you can keep your head while your competitors panic.
Every business should pursue timeframe-appropriate planning and forecasting. Your planning system must have the flexibility to support different modeling techniques, depending on the timeframe under consideration or on the scenario.
For instance, with kopilot, you can envision at any time and instantly your sales over the next 12 months according to four scenarios:
- what if we do as in the past?
- What if we maintain the current growth rate?
- What if we let the market trend guide us?
- What if we believe in statistics?
CFO's role is evolving to coordinate the company's information, analysis, and decisions in rapid, continuous cycles to create a more innovative and efficient organization.
As a business owner, you're in the right to expect your CFO to become an accurate and robust partner. Your CFO is your copilot. And what if you could put it in your back pocket?
kopilot aims to make comfortable SME business owners that are uncomfortable with numbers. It helps businesses with managing sales, expenses, clients, profits, and plans. It is brimming with powerful dashboards and dynamic reporting capabilities that allow you to unlock key insights from data streams to enhance the decision-making process.