What does it mean for a chief finance officer to be strategic? More urgently, what is required of chief executives to enable the deep insight required of modern-day CFOs? It’s already well known that the first step involves freeing CFOs and their teams from repetitive, perfunctory tasks. But a greater part of the strategic equation involves giving CFOs the tools they need to actually acquire those insights. Few business leaders can claim to be miracle workers, but enabling high-level strategic finance operations can bring CFOs closer to that standard.
Helping a CFO to escape the mire of transactional work and delve into value-adding projects may be easier than most CEOs assume. However, according to a report from Chief Executive Network, it’s the details of the process that prove most important to success.
“In these organizations [without a strategic CFO], financial analysis is primarily confined to that which has already happened,” the report from CEN explained. “The CFO’s job, by contrast, should be to help the CEO create the future.”
Set CFOs up for success
Doing so involves implementing a series of changes in the company’s financial processes. CEN found that in top-performing businesses across all industries, CEOs and CFOs worked to accomplish these changes in similar ways:
- Executive teams first collaborated closely to drive strategy.
- Capital resources are allocated with an eye toward efficiency.
- Due diligence takes first priority in M&A transactions.
- Profits are reinvested as they grow.
- New technology is leveraged throughout the organization.
- Risk assessment and controls are implemented to continue the cycle.
The first step that must be taken in this process is a reallocation of the CFO’s time. According to a survey of CFOs at more than 120 large, profitable corporations conducted by Deloitte, researchers found strategic CFOs devoted much less time to traditional finance and accounting work than their middling peers. In the most effective organizations, CFOs devoted more than a quarter of their time to developing and executing their broad organizational strategy. Additionally, more than half of time spent by these strategic CFOs was combined into driving growth through alignment of short- and long-term objectives.
Achieving new priorities
Exactly how CFOs are actually accomplishing this shift in priorities varies depending on the organization. But one trend that’s remained consistent across industries is the reliance on outsourcing and shared services for F&A tasks. These jobs are extremely sensitive from many perspectives in that they need to be completed quickly, accurately and with the utmost discretion. Unbeknownst to some CFOs, the modern age of business outsourcing makes all of this possible for F&A tasks. Finance teams now rely more on shared services to offload transactional work, helping to make their business more efficient overall, and reducing much of the burden inflicted on CFOs from these jobs.
When outsourcing F&A tasks, lower costs and higher efficiencies are not the only result. Increasingly, companies are treating their shared services vendors as strategic partners. This new approach to outsourcing is enabled by the cloud services model, allowing easy access and secure communication the likes of which have never been seen before. Thanks to these developments, more finance teams are using outsource partners to bolster their talent pool and drive innovation at all levels of the business.
Developing a strategic CFO requires a close working relationship with the CEO, but that end goal is but one piece of the organizational puzzle. Consero knows how to both foster this relationship and holistically develop a business from every angle. By giving companies the tools and expertise they need but find it hard to get, Consero becomes a key partner in unlocking a CFO’s full potential.
