What is Financial Leadership

Strong leadership plays a critical role in ensuring that organizations stay financially adaptable and are able to build resilience and sustainability in today’s fierce market. The importance of good leadership may seem obvious, but what is less obvious is what makes a good leader. The most effective leaders have a sophisticated and thorough understanding of their organization’s financial health, and they make decisions grounded in financial realities. Then, they are able to use that information in their communication to demonstrate the strategic connection between money and mission.

Leading CFOs (Chief Financial Officers) around the globe say that they need financial leadership to bring their finance teams to the next level in driving business performance. Management accountants and bookkeeping professionals say they need financial leadership to be able to advance their careers or the careers of their staff. In this article, we will explore what financial leadership means.

The Need for Financial Leadership in 2020

Who is better positioned inside an organization that the CFO to develop structure from complex processes, as well as create sustainable financial success in business? CFOs are financial leaders who take their financial knowledge and expertise and channel it into a role to create financial success for the enterprise and its stakeholders.

Financial leadership means that the Chief Financial Officer performs in a way that will bring a competitive advantage to the company (not only, but especially during times of financial crisis). From the advisory board to the business owner to the C-suite employees to the program staff – everyone has their own role to play in forecasting, budgeting, and analyzing for the long-term financial health of the company. However, the CFO is a confidant within or outside their company who can lend examples, perspectives, and advice.

Finance experts have a deep understanding of the banking relationships and business model, prepare detailed management and financial reports, work with business owners and the C-suite staff and board of directors and auditors, set policies around payroll and controls, and oversee tax planning, manage cash flows, and more. Their responsibilities include compliance issues, managing acquisitions, mergers, budgeting and forecasting, and creating a financial safety net for the business.

Typically, CFOs say that their finance function collaborates closely with risk management and compliance, operations, and internal audit (where finance presence is expected). Lately, many are starting to collaborate in areas where they could also make a big difference, such as HR.

With strong financial leadership, your company will be forward-thinking because you will have someone who is able to read the financial numbers and consider various issues (from economic to tax to industry obstacles). CFOs are particularly valuable for quickly growing organizations with complex product lines and a large number of employees. They provide financial leadership when forecasting performance, which is essential as an organization sets its sights on getting additional funding.

Transformation of the CFO Role

The value that finance leaders can bring to a company and the nature of the transformation of the CFO role is among recent insights collected from the CEOs that show how the relationship between the CEO and CFO is evolving. Today’s CFOs provide immense support to the CEO, advisory board of directors, and management team because they naturally bring a higher level of financial understanding. Such financial understanding serves as a lens to bringing difficult business decisions. The imperatives of any organization include clearly understanding the company’s vision through business insights (based on great financial understanding) and focusing on sharpening and articulating the corporate strategy.

What financial leadership brings to the table is fulfilling the need for balanced finance and business skills and capabilities.

Increasing Interest and Need for Analytics

Analytical insight is one of the most important emerging features in an organization’s financial leadership. The pressure on finance directors to provide valuable insight to support the company’s decision making is increasing. Organizations often say that one of the drivers for the finance transformation journey is moving the retained financial function away from the process delivery in order to better support the business in financial support and analysis. Nowadays, the finance function is seen as the function that correlates, regresses, extrapolates, and joins the data dots to drive further insights and help make data-informed business decisions.

Financial analytics is an essential area with which you can enhance your finance function. Financial analytics is important because:

  • It helps in shaping up future business goals while allowing you to improve your decision-making, financial strategies, and provide a financial safety net.
  • Every organization should have sound financial data for forecasting and planning to leverage the business.
  •  Every organization needs timely and accurate information, as well as improved financial visibility across the entire organization.
  • The needs for advancement in technology, the changing needs of the traditional financial department, and the emergence of new business models all lead to the need for financial analytics.
  • It provides more in-depth insight into your enterprise’s financial health and improves the value, cash flows, and profitability of your business.
  • Tax, bookkeeping, risk management, accounting functions, and other areas of financing are relying on large volumes of financial information that should be combined with analytics, so financial executives can interpret and leverage the data to run the business more effectively.

Over the last few years, organizations have opened their eyes to the value that finance can bring to them – well beyond the traditional role of providing standard financial reports at the end of each year. More and more CEOs are looking to CFOs and financial managers for actionable insight. Finance analytics arms finance executives leaders with the tools to make sense of a complex world of financial data. By combining external information (e.g., big data, demographics, and social media) with internal operational data and financial information, leaders can address critical questions with unprecedented accuracy, speed, and ease.

What Do Finance Leaders Need to Prepare for Their Expanding Roles?

In addition to their traditional responsibility, financial leader positions involve taking on various roles – part collaborator, part data scientist, and part strategic advisor. To become a financial executive, finance professionals need a certain set of skills to be prepared for this expanding role:

  1. Technological aptitude

Technology and digital disruption are changing how companies operate but are also driving financial leaders to learn how to make the most of advanced technologies, such as predictive analytics, machine learning, and artificial intelligence. In reality, finance executives aren’t expected to delve into details from the tech aspect of IT, but they should have a good understanding of their enterprise’s tech infrastructure. What they need to know inside and out are the finance and accounting function tools because they must be able to find targeted, powerful metrics relevant to business operations. The CFO can no longer rely solely on finance skills.

  1. Strategic planning

All of these demands require finance professionals to take a broader, expanded role in decision-making and developing financial strategies. They have become the architects of business value, which means that they must be forward-thinking and able to develop strategic plans.

  1. Change management

With new technology and growing competition, most organizations today are in a state of flux. Finance leaders are now at the heart of change initiatives – helping to steer decision-making, guiding investments, and managing costs. That is why change management has become such an important skill for financial leadership, especially now with the recent economic downturn caused by the COVID-19 outbreak, because CFOs need a clear view of opportunities and challenges that arise from each change.

  1. Collaboration

Strong collaboration skills are necessary for being a successful financial leader due to all these overlapping new roles and responsibilities. CFOs need to establish supportive and effective working relationships with the leaders of other company departments. Arranging job shadowing and holding interdepartmental meetings are some ways of promoting collaboration.

Many of the functions that work with finance are looking for why they need to move in a certain direction. Understanding what levels of communication a financial leader needs to get people through change is becoming more critical.

  1. Understanding when to utilize outsourcing

Understanding the various options of outsourced finance and accounting, as well as when to use them, offers some great benefits to financial leaders. It is easier for a CFO to get valuable insights into business operations and handle critical, long-term, and daily tasks with a team of experienced professionals who handle the day-to-day transactions and provide exceptional service at a fixed price. Therefore, resorting to Finance-as-a-Service (FaaS) is the perfect solution that can help companies maintain scalability and financial stability to achieve success. Besides helping you improve your company’s financial visibility, increase efficiency and reduce fraud, bring cost savings, and help you execute with confidence, Consero also offers CFO services – a financial expert that will become a part of your team and help you focus on the strategic aspects of your business.

Finance Leaders as an Important Source of Information

When we think about how the finance function collaborates and fits with the rest of the enterprise, we must first recognize that it’s a trusted source of information. There is always that core role that financial leaders play in the organization, which is the place that the organization goes to measure the performance and get accurate data. But now more than ever, there is more emphasis on framing and communicating the information, as well as influencing it. With great visualization technologies, finance leaders and CFOs can drive a lot of great decision-making. However, they have to be proactive and not just wait for the CEO, investors or 3rd party institutions to seek answers.

We at Consero offer a wide range of financial support services to meet the unique needs of your staff and board at every stage. If you are ready to professionalize your finance function and develop financial growth for your organization, get in touch with Consero today.


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:
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