Advice To The Modern CFO: Keep Looking Forward

For the modern chief financial officer, priorities are on the move.

While the traditional responsibilities like facilitating the monthly close and completing key financial reports remain in place, there are additional requirements to fulfilling the role.

Increasingly, said Steven Lord, a CFO and provider of CFO consulting services for startups at Burkland Associates, the CFO is also a vital leader in organizations’ digitization initiatives. And amid the pandemic, not only has this particular function of the CFO position strengthened, these finance chiefs have also added another key responsibility to their roster: helping organizations pivot business models.

“The role of the CFO is changing,” Lord told PYMNTS. “If you think it’s the guy with the green eye shade in the basement that produces reports once a day, that’s not what we’re doing.”

Lord explained what CFOs actually are up to in order to help their organizations succeed amid volatile times. As finance chiefs step up to the plate, Lord is urging these professionals to keep looking forward.

The Digital Opportunity

While enterprise digitization has accelerated amid the pandemic, Lord noted that this journey has been in place for years for many firms — and that the CFO has had a seat at the decision-makers’ table for quite some time.

“We were already heading there, and the pandemic has accelerated it quite a bit,” he said. “As soon as you started heading into QuickBooks Online, Gusto, Xero and all of these applications to help us connect the different areas of the finance stack, we started seeing that nexus really take shape.”

With the finance chief standing at the crux of a growing number of digital platforms, the CFO’s emerging role is to “connect the dots” between these portals to obtain actionable insights from all of the data flowing in and out. What’s vital now is for CFOs to do so accurately and quickly, but luckily, said Lord, these technologies can facilitate real-time insights. Anything slower means the data loses its value.

“You can almost say it’s like getting a COVID test and getting the results a week from now,” he said. “It doesn’t really do you as much good as it should.”

What Happens If…

As CFOs work to obtain real-time visibility into what has been and what is now, they’re also tasked with looking ahead to guide their businesses forward.

That role has elevated dramatically as so many companies have pivoted their business models in an effort to stay afloat at a time when supply chain volatility and store closures threaten the initial business strategies of so many organizations.

What Lord has seen is an opportunity for the CFO to provide understanding for the rest of the C-suite as to whether or not the pivot will be profitable. Beyond that, organizations need to know whether a business will be better off than if it wouldn’t pivot, and to detail net profit margins, gross profit margins, and how much capital a business will need if it moves forward with a new business model.

Ultimately, the CFO can offer visibility into how much the pivot is going to cost, and how long it would take for capital to begin returning back to the organization.

It’s an example of how important it is for the modern CFO to continue looking forward. According to Lord, it’s particularly important for startups to understand the value of the CFO as opposed to having only a CPA (certified professional accountant) running the books.

“Getting a CFO alongside you earlier in your lifecycle rather than later is super important,” he said. “It’s about charting the course ahead with the high beams on to know where to go, how to get there, and what mistakes we can avoid.”

One of the biggest mistakes a CFO can make today is failing to maintain that futuristic outlook — both for the enterprise and for the professional herself.

“If there is a caution out there, it’s that the CFO can run the risk of being less proactive than they could be,” added Lord, “and I would encourage all CFOs out there to think about what they could bring to the team in terms of innovative thinking.”