Finance disrupted: Why CFOs are having to evolve and upskill

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8th April, 2024 No Comments

Kristina Majauskaite-Adomaviciene, CFO at PAYSTRAX

The role of the chief financial officer (CFO) has changed. Providing financial performance isn’t just the name of the game anymore, with everything from cybersecurity to team culture falling under the umbrella of the CFO these days.

Rather than being siloed in a Matrix of spreadsheets and pivot tables, today’s CFO has developed new skills that have seen them become much more of a strategic advisor to the CEO rather than a pure financial advisor.

As a result, it’s opening up new avenues, with a rising trend of CFOs becoming CEOs. 33%
of S&P 500 CFOs became CEOs in 2022 compared to just 9% the year before. But while
this expansion of new skills may be beneficial to the business, it also puts a different kind of
pressure on the role of the CFO.

The many hats of the modern-day CFO
Several different factors have driven the evolution of the CFO, but arguably none more important than the reliance on data. In the digital age, businesses stress the importance of making smart decisions backed up by data, and there are very few roles which can compete with the CFO when it comes to data decision-making.

Not only do financial officers typically have backgrounds in data reporting and analysis, but
they also have a deep understanding of how all the different parts of the business work
together. They have to know how past decisions affect the company’s overall value as well
as risk assessment and be able to predict any major upcoming events that could have an
impact on revenue and profitability.

The ability to analyse trends and past performance to help guide future actions also means
CFOs have new perspectives to bring to the table. This knack for spotting patterns and
understanding their impact makes them valuable partners in the decision-making process
and can help provide a better understanding of how all of the moving parts fit together.
It’s not just about the numbers either.

As the business world evolves, so do the responsibilities of CFOs. The role now involves taking on tasks like ESG reporting and the adoption of new technologies – changes that reflect the growing importance of sustainability and keeping up with the latest tech trends in order to satisfy stakeholders and stay one step ahead of the competition.

But new responsibilities bring the need for new skills. While also having to juggle their
traditional role, CFOs are having to learn and develop areas outside of their core
competencies while ensuring business as usual.

New demands require new skills
In order to thrive in today’s modern business landscape, the CFO requires a diverse skill set
on top of their traditional list of qualities. For example, with hybrid working and asynchronous
working patterns part of the new normal, CFOs now require strong communication and
collaboration skills to effectively engage with various business units and stakeholders.
Every major business department depends on constant communication to keep things
flowing. As head of the financial department, the CFO needs to ensure that they are keeping
everyone in the loop in a way where messages are clear and understandable by all major
components of the organisation.

What’s also equally important is being agile and open to change, and CFOs therefore need
to be receptive to new technologies. The technical environment is constantly evolving, and
the head of the finance department must have the ability to understand and adapt to
emerging technologies quickly.

Being able to calculate risk and manage it is another key quality of a modern-day CFO. On
top of the financial department, there are other risk areas that must be constantly overlooked
and navigated – such as compliance, security, and IT. The CFO has to be able to not just
identify potential threats, but prevent them from happening in the first place.
Finally, always being forward-looking rather than solely focusing on past performance is
important. While historical records of data can be used to show important seasonal trends, it
can also see CFOs trying to drive the business forward while looking in the rearview mirror.

The future CFO
The make-up of the modern-day CFO has changed. As businesses place more emphasis on
data-driven decision-making, the CFO’s insights into business operations and trends are
becoming highly valuable. As a result, finance leaders are becoming heavily involved in the decision-making process across the board, expanding their responsibilities to include emerging priorities like ESG
reporting and technology adoption.

This evolution will place new demands on the role of the CFO, and they must learn quickly if
they’re to survive in the future of business. The whole essence of the CFO’s role is corporate
value creation and being able to drive future growth and success, and this can only happen if
all of these qualities work in harmony.

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