The rise of the strategic CFO

For ERS Med­ical – a med­ical trans­port and ser­vices provider based in York­shire — the past two years have required an adapt­able, agile busi­ness to meet the chal­lenges imposed by the pan­dem­ic. The com­pa­ny has had to change its work­ing prac­tices not only in response to the hybrid work­ing mod­el, but in regards to busi­ness crit­i­cal part­ner­ships and oper­a­tions.

It is no out­lier, either.

Adapt­ing to change – even beyond the pan­dem­ic – has required boards to become more proac­tive, more col­lab­o­ra­tive and more cre­ative in how they solve prob­lems and build stronger busi­ness­es. The role of the CFO with­in those boards is a prime exam­ple of how this trans­for­ma­tion is improv­ing how com­pa­nies oper­ate.

Soft­ware com­pa­ny Sage recent­ly exam­ined the role of the CFO. It asked finance lead­ers about the skills and abil­i­ties they find it most dif­fi­cult to secure. The top two respons­es were ‘stake­hold­er com­mu­ni­ca­tion’ and ‘data skills/technological lit­er­a­cy.’ A close fourth was ‘advanced data ana­lyt­ics.’ This clear­ly indi­cates a need for greater dig­i­tal lit­er­a­cy among chief finan­cial offi­cers.

But no less telling are the least press­ing skills. Only 13% of CFOs said they lacked ‘lead­er­ship and peo­ple man­age­ment.’ And only 16% said ‘knowl­edge of the wider busi­ness’ was a dif­fi­cult skill to acquire. CFOs are inte­gral to cor­po­rate lead­er­ship, that much is clear. What the study does prove is chang­ing is the way in which the CFO inte­grates and col­lab­o­rates with the rest of the company’s lead­er­ship.

“Gone are the days where finance sits in a closed room and just spits out num­bers,” Richard Moorin, UKMMI head of finance at Sage, says. “If you give finance peo­ple the right tool, it gives them the free time to think, to spend more time with busi­ness lead­ers to talk about the num­bers and look for­wards.”

By cre­at­ing a for­ward-look­ing finance func­tion, the busi­ness is capa­ble of being more proac­tive, rather than sim­ply look­ing back at num­bers from the past quar­ter or year. This is allow­ing CFOs to add strate­gic insights and col­lab­o­rate more with their col­leagues in the C‑suite. “We’ve nev­er real­ly had the time to do that before,” says ERS Medical’s finance con­troller Kather­ine Lees.

That is not only an added ben­e­fit for the company’s resilience and plan­ning but for its effi­cien­cy. With tools like Sage’s Intac­ct soft­ware, which auto­mates tra­di­tion­al­ly time-heavy tasks like pay­roll, expens­es and pay­ments man­age­ment, finance depart­ments spend less time pro­cess­ing num­bers and more time analysing what those num­bers are try­ing to say. By using those insights to think strate­gi­cal­ly, they can deliv­er tan­gi­ble ben­e­fits to the bot­tom line.

This, how­ev­er, has led to the need for finance pro­fes­sion­als with greater data analy­sis and dig­i­tal skills, a phe­nom­e­non which long-time finance recruiter Robert Rus­sell, region­al man­ag­ing direc­tor at Reed, says is only increas­ing. CFOs are now required to be “busi­ness part­ners in mind­set,” “able to work with dif­fer­ent senior stake­hold­ers in a com­pa­ny.”

Rus­sell adds that data insights can con­tribute to a greater under­stand­ing of cor­po­rate risk. Finance pro­fes­sion­als can build a frame­work for cyber risk man­age­ment, oper­a­tional resilience and com­pet­i­tive advan­tage. “If you’ve got a com­mer­cial­ly switched-on strate­gic senior finance leader in your busi­ness, they will not only help your com­pa­ny to make good deci­sions, they’ll also col­lab­o­ra­tive­ly work with oth­er senior stake­hold­ers to present a dif­fer­ent point of view on some­thing. That helps make bet­ter busi­ness deci­sions and ulti­mate­ly dri­ves busi­ness per­for­mance,” he says.

Think­ing more cross-func­tion­al­ly about a busi­ness’ per­for­mance means that oth­er teams are empow­ered to under­stand finance more and improve their own work based on those insights. ERS Med­ical uses finan­cial infor­ma­tion to inform oper­a­tions, for exam­ple, to under­stand costs, deliv­er sav­ings and plan for poten­tial risks. “It just empow­ers every­one at all lev­els to be able to do what they need to do so that the busi­ness can thrive togeth­er,” Lees says.

Moorin agrees, “We’re not the ‘com­put­er says no’ finance depart­ment. You’re giv­ing some­thing to peo­ple that helps them under­stand the num­bers and actu­al­ly see in real time what the impact is.” Rather than deliv­er back­wards-look­ing reports, real-time data can sup­port busi­ness lead­ers in mak­ing effec­tive deci­sions. “It allows for bet­ter con­ver­sa­tions and peo­ple start to see finance as a valu­able resource rather than just an over­head,” Moorin says.

Mak­ing data-dri­ven deci­sions quick­ly and accu­rate­ly means com­pa­nies can “change tack and direc­tion at any giv­en point, if you need to, based on what the data is telling you,” adds Saman­tha Mor­ri­son, prod­uct mar­ket­ing man­ag­er at Sage. She points out that this con­tributes to the grow­ing cred­i­bil­i­ty of the strate­gic CFO.

But find­ing the right peo­ple to fill those roles requires finance pro­fes­sion­als to not only have the account­ing nous, but to be able to see the val­ue in act­ing as a strate­gic busi­ness part­ner in the board­room. Com­pa­nies, Rus­sell says, are look­ing for CFOs who look toward the future. How­ev­er, gain­ing those skills require finance pro­fes­sion­als to either upskill by under­tak­ing exec­u­tive coach­ing and train­ing or to extend their expe­ri­ence beyond the scope of account­ing. Rus­sell says some­times this expe­ri­ence is gained at small­er com­pa­nies, where depart­ments are more col­lab­o­ra­tive by neces­si­ty, but often it’s a mat­ter of seek­ing cours­es and career edu­ca­tion that can help improve the dig­i­tal acu­men of the finance pro­fes­sion­al.

For Lees’ part, Sage made that straight­for­ward. Even in the chal­leng­ing con­di­tions posed by the pan­dem­ic, the easy access points to Sage’s tech­nol­o­gy allowed the finance team to imple­ment dig­i­tal solu­tions with ease, which helped alle­vi­ate some of the stres­sors of the shift to home-based work­ing. By elim­i­nat­ing some of the need to process num­bers, Intac­ct allowed ERS Med­ical to focus on changes to the busi­ness.

Moorin says, “I think the nature of finan­cial lead­er­ship has changed quite a lot over the last few years. The world moves a lot faster than it used to; so, you can’t just sit still. You have to be able to try and report and pro­vide analy­sis in rel­a­tive real time. You have to have some tools that allow you to do that. Because if you don’t, it just doesn’t allow the busi­ness to be as adapt­able as it needs to be these days.”

The strate­gic CFO has proven its added val­ue to the busi­ness. For CFOs to reach the point where they are seen as future-fac­ing part­ners, they must be will­ing and able to embrace tech­nol­o­gy. But, when the tech does the hard work for them, the ben­e­fits are easy to see – and to quan­ti­fy.

To find out more please vis­it sage.com.