Chief financial officers have played increasingly important roles in companies regardless of industry as the synergy between strategic insight and financial rigor becomes evermore apparent. Yet as the CFO’s role evolves in today’s market, many finance professionals are unsure of the responsibilities they should embrace to be a strategic asset to their company. By cultivating a mindset that is focused on financial and organizational strategy, CFOs can ensure that they become a pragmatic strategist in the higher echelons of management.
To do this, chief financial officers must:
- Acknowledge constraints. When CFOs determine the constraints that are holding the company back, they can work to address them and move the company forward. Whether it’s organizational debt or any other financial constraint, CFOs must develop a strategy that overcomes these constraints and allows the company to move forward. Because CFOs have financial acumen that their colleagues in higher management don’t share, they’re in a unique position to drive the company in a direction towards profit growth, greater sustainability, and minimized risk. In other words, CFOs must transition from financial scorekeeper to a tactical visionary for the company.
- Recognize uncertainty. When CFOs find areas where uncertainty faces their company, they can assess their current financial and business plans to mitigate those risks. While there will always be uncertainty in any industry, potential risks can generally be minimized to a point where they don’t hold the company back or otherwise freeze decision-making. Once key areas of uncertainty are resolved, CFOs can create practical approaches to grow the business without unnecessary risk.
- Predict potential disruptions. Part of becoming a strategic partner means that CFOs must expand their capacity as a trusted advisor. It’s important to note that not all disruptions may necessarily be financially based, but that the financial department can often help address these situations. For instance, how would your company react if a competitor merged with another company? This would undoubtedly change the playing field and profit considerations. While it might not directly impact the finance department, there are many ways the financial team can respond to dramatic shifts in the market.