Focus for the modern CFO
For a long time the main role of the Chief Financial Officer (CFO) has been to bookkeep the revenue and costs of the company. That is why we call CFOs of the past : Bookkeepers.
On the contrary we call modern CFOs : the Data Analysts because their primary job is to analyse the automatically generated numbers and make sure the company is heading in the right direction.
The CFO of the past : The reactive bookkeeper
The CFO of the past spend most of the time collecting data from different sources.
When the CFO needs a summary of the monthly sales the CFO asks the sales director, which usually send an excel file per email.
Same thing happen when the CFO wants the monthly commissions, then both the sales department and perhaps HR gets involved . Perhaps it’s even given as a .CSV sheet on a USB stick.
Once the CFO has successfully collected everything, another challenge arises, the CFO needs to gather all information in a single file, on a single format.
That means the CFO risk spending countless hours copying, cutting and merging data and do it again each time a file is corrupt or if the CFO forgot to save the work.
The state of the company in terms of cost forecasts, sales forecasts, revenue forecasts etc. become snapshots that are given on a quarterly or perhaps monthly basis.
As understandable, it’s a labour intense work.
Against this background it is not a big surprise that the CFO of the past is not primarily concerned about analysing the future when the CFO barely can cope with reporting the past.
Thus the CFO becomes less business oriented and more focused on rules and compliance, which are important of course, but not on the actual sense the data makes or how that data affects the future of the company.
The modern CFO : The Data Analyst…
The modern CFO won’t spend a lot of time collecting data. Why ? Because the modern CFO makes sure the different departments uses relevant softwares to share information, in realtime :
> A Sales acceleration platform will provide the sales number, in real time
> An ERP for the finance department
> A HR software will provide the monthly salaries
It’s not just that. It’s also because the modern CFO needs/wants to :
Be proactive: By using modern technology the modern CFO knows that automatising the data gathering will make it easier to become proactive and see things before they happen. This gives more energy to the finance team to focus on strategy and fowar-thinking analysis.
Removes silos: The modern CFO realise that it’s not enough to have separate digital tools if for different departments, if they are not connected. The modern CFO applies modern technology to connect the different departments in seamless information flows. By doing so they can therefore become agile and able to support the different departments in their effort to reach the targets in the most cost efficient way.
See beyond classical KPIs: The modern CFO and the colleagues on finance require integrated end-to-end solutions for marketing, sales, delivery and finance to be able to see beyond the classical KPis. They are able to do that since they have digital solutions to both track and analyse data in realtime. This both gives them the agile capability to assist the other teams in their efforts to improve the KPIs and also puts them in a position to see patterns not know before.
Needless to say that the modern CFO will have access to the information everywhere and anywhere thanks to mobile softwares, giving a precious advantage over the competitors.
Preferably the modern CFO will use the new available time analyzing the already compiled and stored data and try to answer meaningful question for the company such as :
> What type of product is the most / less profitable ?
> What type of customers is the most important from a cash perspective ?
> What is the cost of sales and customer acquisition costs
> When do we run out of cash
> Do we need to push or pull something to not risk the business
The modern CFO is business oriented and can answer business questions like : How many meetings on average do we need to close a deal ? What is our current cost of sales ? By knowing these things the CFO can assist the Sales director in the efforts to optimise the sales performance.
The modern CFO can also easier assist the CEO in the board meeting and assist the CEO to take business decision from a financial perspective like :
> Should we address this new type of customers ?
> Should we stop producing this line of products.
> Should we stop selling this type of service and when.
These topics might seem to be basics for many but in reality it’s clear that these focus areas are not built in to the DNA of all CFOs.
… that is digital and agile.
To be able to free up time to focus on analysis the modern CFO require a digital set of tools that perform the data gathering automatically.
As long as the CFO and other people on the financial department are tied down in administration and manual data gathering less time is going to be available to perform analysis.
A modern CFO is therefore connected and up to date on all numbers and forecasts anywhere they are and in realtime.
A modern CFO require digitalisation, since they know that the competitive landscape they operate in require both agility and quick decisions. Then too much time can’t be spent on data gathering.
A modern CFO works closely together with sales and marketing around key KPIs that are important to track to know if the business is moving as expected against the set growth targets.
CEO & Founder Salesbox