The Changing Role of CFOs in Professional Services

The Changing Role of CFOs in Professional Services

In today’s highly volatile and uncertain business environment, technology has also played its part in the overall disturbance. The rise of cloud computing and automation has changed the finance leader role in surprising and unexpected ways.

CFOs have always had an important role in C-level decision-making, but now they also play a pivotal role as partners and problem-solvers for their client organizations.

The CFO’s new responsibilities include being the chief customer advocate, understanding customers’ challenges and opportunities better than any other person on the C-suite executive team.

The CFO is a C-level executive who has traditionally been in charge of running financial operations for the organization. Historically, this meant they were primarily focused on ensuring the company had the funds necessary to operate and grow. With cloud technology becoming more prevalent, CFOs have shifted their focus from managing the budget to leading decisions around critical strategic questions: What does it cost? What should we invest in next? Who are our customers? How do we make them happy enough to give us their business again and again?”

Below we will be looking at how the roles of finance leaders in the professional service sector have changed and what CFOs need to do to succeed in this new environment.

The Finance Department’s Shift Towards The Customer

Unlike the manufacturing sector, where product defects can be immediately identified and repaired, the professional service sector faces more unique customer challenges. Since true service quality is only proven later in the customer cycle, it will only initially be based on the service provider’s initial reputation and overall trustworthiness.

Professional service firms have historically focused on promoting “expertise” to win the trust and reputation of their customers. Statistics show that around 46% of executives point towards “expertise” as the main differentiation amongst the competition.

But as agile, customer-centric competitors seek to challenge established businesses, expertise alone is not enough. Professionals have also expressed great anxiety over these new customer expectations.

Customers now demand more value, a better quality of work, and an increased speed of service delivery. This is thanks to the technological improvements that allow for less human input.

The CFOs in organizations must find solutions that are both effective but also maximize customer satisfaction through transparency and accountability – all while not slowing down on their current responsibilities.

Also, according to the study above, “customer loyalty and advocacy will increasingly become the one true way to stand out from the competition. The research clearly finds that a new basis of competition is arising. Incumbents must evolve, or risk losing business to more nimble firms with innovative business models.”

In other words, decision-makers at professional service firms need a better understanding of how to delight customers than in the past. This change has transformed the expectations of CFOs and the finance function. One study has also shown that nearly 2/3 of CFOs feel substantial pressure to change their team’s mindsets to become more customer-centric.

Similarly, some 64% of customers, who are better informed and more tech-savvy, expect that companies respond and interact with them in real-time. CFOs are more likely to get involved in the decision-making process regarding product and service pricing.

How Automation and Cloud Computing Influence the Finance Function

Cloud computing has dramatically influenced the CFO role, as CFOs can now take advantage of new opportunities through cloud services such as business intelligence software and automation tools to free up time for strategic decision-making and customer-facing roles.

CFOs are increasingly required to make strategic decisions to anticipate and better react to the market conditions, consumer behavior, regulatory change, etc., which has traditionally been more of a CEO’s role.

The CFOs also have responsibility for understanding the customer and ensuring that they are happy with their experience while doing business with the organization, which was not traditionally a CFO function.

Aside from direct customer expectations, today’s cloud and mobile technologies have directly impacted the daily finance function operations. CFOs are typically responsible for financial reporting, forecasting, budgeting, taxes, and regulatory change investment decisions.

CFOs also have a critical role in managing the company’s IT infrastructure: servers, storage systems/warehouse management, and the company’s IT department. And because of this connection, CFOs are also expected to reach beyond their core capabilities. This ranges from finding new ways to developing revenue streams to adopting new metrics by which you measure success.

Aside from that, other areas of concern include billing, cash flow management, and expenses. In addition to their increased workload, finance leaders also need to focus on talent acquisition and management.

With increasingly automated and AI-empowered Cloud technologies, finance professionals are now expected to have more data-driven skills than task-based ones.

How Professional Service CFOs Succeed?

The most effective managers in professional service organizations are those with the ability to combine strategic vision and change management skills. As the CFO has become increasingly decision-oriented, they have been able to better anticipate and react to trends. Unfortunately, not all finance leaders are able to take on this role.

Common reasons for this include:

  • Risk Adversity – A major responsibility of the CFO, in many organizations, is risk management. When dealing with mature outdated infrastructures and processes, this can lead to a myopic focus on problems instead of broader possibilities.
  • Limited Strategic Leadership Skills – Professional service companies traditionally promote people based on leadership qualities such as who has been with the company for the longest or who has billed a large number of hours. These qualities do not always translate well to effective leadership, especially in challenging times.
  • Limited Resource or Energy to Manage New Demands – Accounting leaders already spend a significant proportion of their time overseeing the implementation of organizational projects and managing expectations from other leadership teams. This leaves CFOs with less of a chance to handle additional demands on their time.

To succeed in a changing industry, successful CFOs need to do the following:

Embrace the Digital Transformation

The CFO has the potential to be a driving force in helping organizations embrace digital transformation and drive success. They have access to all of the data that is needed and knowledge about how best to use it for successful decisions.

CFOs are also key ambassadors between external stakeholders such as customers, investors or partners, internal C-level executives, owners, and other stakeholders. CFOs can play a critical role in the success of an organization by balancing financial objectives with innovation and customer-centricity.

Top areas to focus on include:

  • Using intelligent real-time technology to build a better customer relationship. This helps the CFO understand what is important to customers and then make these changes in their products.
  • Encourage safe spaces across the organization for experimentation and creative thinking to help talent-scarce SMEs develop the full potential of talented individuals.
  • With cloud technology and automation, the role of a modern finance leader has shifted. They now take more direct actions to help incorporate customer feedback, such as listening to different departments and synthesizing that knowledge with the customer’s needs, expectations, and pain points.

Investing In The Right Digital Tools

CFOs should also look towards the right tools capable of automating their daily routine processes and allowing them to focus on customer relationships. CFOs should be looking for the right tools that will make their work easier and more efficient and cut costs in the form of time or money. CFOs need to invest in new technologies if they are not already doing so.

One such tool is Consero SIMPL. Designed specifically for CFOs, executives, managers, and other department heads, SIMPL is a cloud-based one-stop platform for all financial needs. CFOs can run their entire company from this software, including reporting and all aspects of financial management. CFOs will be able to cut costs on paper now that they have the right tools for automating processes, as well as streamlining tasks and projects with a single-source system.

Among the features of this platform, we can include:

This CFO software can be integrated with other business applications such as project management, accounting, and time tracking. CFOs will also be able to access client information in real-time, which allows for better customer service and quicker decision-making.

CFOs are no longer the behind-the-scenes managers of a company’s finances – they are critical players in the organization’s overall success. CFOs are often the most knowledgeable about all aspects of a company’s finances and have access to essential data points when making decisions.

Cloud CFO software empowers CFOs with an easy-to-use platform that allows them to make more informed decisions, provide better customer service, and manage their organization in ways they never could.

Consero FaaS: Disrupting the Outdated Traditional F&A Model

  • Cash to GAAP conversion
  • Clean-up work
  • Interim oversight & support
  • Accounting software Implementation

Build it Yourself Solution

  • CFO / Interim CFO
  • Consultants / VARs

Consero FaaS Solution

  • CFO / Interim CFO
  • or Consero Interim CFO
  • Consero Setup/Transformation
Ongoing F&A
  • Monthly financials
  • Daily accounting support
  • Management reporting
  • Integrate add-on acquisitions

Build it Yourself Solution

  • CFO
  • Controllers & Accounting Team
  • Enterprise Accounting Applications

Consero FaaS Solution

  • CFO
  • or Consero Fractional CFO
  • Consero FaaS Enterprise F&A Software and Services

New PE Platform Investment F&A Challenges

Founder Owned Company Accounting:
  • Existing accounting done on a cash/hybrid basis
  • Run on SMB accounting software and other disparate applications
  • Inability to produce auditable financials
  • Lack of know-how to develop projections & KPIs
  • No consistency/structure to customer contracts
  • Underqualified staff
  • Non-scalable manual processes
Carve-Out Accounting:
  • Required to move off parent company accounting applications in a timely fashion
  • Have to build an entire F&A team
  • No documented operational policies and procedures
To Optimized Finance & Accounting:
  • Monthly financials available in 5-10 business days
  • Audit and diligence ready support details
  • Integrated enterprise grade accounting software
  • Budget and forecast reporting
  • Business KPIs
  • Efficient & scalable processes for rolling in add-ons