Moving from spreadsheets to strategy, the role of the CFO – and the finance department in general – is evolving to take on greater operational control and project management for a business. According to a McKinsey Global Survey, CFOs are increasingly charged with investor relations, board engagement, and technology adoption, as well as ESG risks and opportunities. From every angle, CFOs are influencing change in an organization.
While those responsibilities certainly remain important ones, a number of circumstances have come together to redefine expectations of CFOs. They include:
The disruptions of the pandemic. When the pandemic began in early 2020, many companies were faced with a wide range of challenges. For some, such as those in the hospitality industry, they included shutdowns or severe revenue losses, while virtually all types of business faced issues due to supply chain issues, staffing problems or other unexpected consequences of the pandemic.
Amid this uncertainty, companies began to ask—to truly need—far more of their CFOs. They sought strategic planning help from a professional with strong finance skills and a deep and holistic understanding of the organization. CFOs stepped up to provide forward-looking perspective on the best ways to prepare for what might come next.
Digital transformation. Finance is employing new technologies that are able to handle lower-level tasks so that finance leaders and their entire teams can take on higher-level responsibilities. Finance teams use data analytics, artificial intelligence and robotic process automation to perform repetitive processes and to deliver results faster than when these steps were done manually. Those new tools improved efficiency and gave CFOs the time and the timely information they needed to shift their focus.
New functions under the finance umbrella. As organizations began to recognize the value that CFOs and their teams can bring, they have decided in many cases that certain functions not usually associated with finance should come under this area’s supervision. For example, CFOs can ensure that the metrics developed for an organization’s environmental, social and governance (ESG) efforts are appropriate and accurate and that they align with corporate goals. They can also address ESG regulatory reporting and compliance issues. Similarly, many companies have decided that finance is best suited to oversee information technology functions and their alignment with company strategies. These new responsibilities have broadened and elevated the role of the CFO.
The job of a CFO is evolving rapidly. In the past, they helmed a department that oversaw cash flow, financial planning and reporting, and risk management, and that ensured compliance with regulatory standards. They focused mainly on offering accurate historic financial information. While these responsibilities are still a critical component to the role, businesses are now also relying upon CFOs to forecast the future – to guide technology transformation, provide talent and outsourcing arrangements, and plan sustainability initiatives.