CFO playbook: 3 strategies for the financial front line

The role of the CFO and requirements for finance teams have become increasingly complex in recent years.

It’s not just about financial reporting and compliance. As a CFO, you also need to provide strategic leadership, while driving innovation and technology to improve business performance.

Successful leaders constantly learn. And the World Finance Forum, held at London’s O2 Intercontinental Hotel, brought together top financial professionals worldwide to discuss the latest challenges and trends in the industry.

In this article, we highlight three actionable insights that you and your financial team can use to tackle challenges now and in the future.

Here’s what we cover:

• 1. In tough times, data and insight can push your business forward
• 2. Financial planning and analysis can drive innovation
• 3. 5 steps for a CFO to become the CEO’s strategic partner
• Final thoughts on the World Finance Forum

1. In tough times, data and insight will push your business forward

For businesses of all sizes, collecting, analyzing and using data is crucial to success.

From customer behavior and market trends to financial performance and operational efficiency, data provides valuable insights that allow you to make informed decisions and stay ahead of the competition.

However, data is not just the IT department’s or analysts’ responsibility.

The finance team plays a critical role in the data-driven decision-making process.

By partnering with other departments, such as marketing, sales and operations, finance can provide valuable financial insights that help drive business performance.

Finance can help marketing teams determine the return on investment (ROI) of various marketing campaigns, for example, allowing them to allocate resources more effectively.

Similarly, finance can work with operations to identify cost-saving opportunities and streamline processes. By partnering with the rest of the company, finance can provide a holistic view of the business and help drive strategic decision-making.

Lewis Dangerfield, chief financial and transformation officer at Osprey, said: “The big thing for us is data. We’re a medium-sized business looking to double in growth in the next couple of years.

“We rely on data that the finance team is aware of, but other departments realize that they need data and insight to push the business forward.

“The finance team is shifting from becoming a back-room function into something more front of house and embedded within different teams across the group.”

One source of truth for easily accessible data

For data to be truly valuable, it needs to be accurate, consistent and accessible. You need to tie data together as one source of truth, ensuring all departments are working with the same data, without discrepancies or inconsistencies.

Additionally, it’s important to be able to access the data quickly and efficiently, so teams can make informed decisions in real time.

For your finance team, having access to accurate and up-to-date data is critical to their role in your business.

They need to be able to quickly analyze financial data to identify trends, make forecasts, and provide insights to other departments.

If your data is scattered across different systems or there are inconsistencies, that can lead to errors and delays in decision-making, which can have serious consequences for the business.

By tying data together as one source of truth and making it easily accessible, you can ensure your finance team has the information they need to do their job effectively. This helps increase efficiency, reduce errors, and drive better business performance.

Lewis said: “We use a myriad of different systems, as it’s about drawing them together so that we’re getting the insights quicker.

“For us, it’s particularly about getting on top of cash flow and understanding when there will be a challenge. It’s about having sight of data as quickly as possible.”

Cash flow management

At the World Finance Forum, there was a lot of talk about the impact of inflation, which is a major financial challenge, especially when it comes to cash flow management.

To navigate these uncertain times, you must deeply understand your financial position through data insight to make informed decisions.

Data insight is crucial to your cash flow management because it lets you track and analyze your cash flow in real time.

By understanding where cash is coming from and where it’s going, you can make more accurate forecasts and develop strategies to improve cash flow. This might involve optimizing payment processes, negotiating better payment terms with suppliers, or identifying cost-saving opportunities.

Inflation also impacts pricing strategies and revenue streams, making it even more important for companies to understand their financial position clearly.

With data insights, you can monitor changes in pricing and adjust your strategies accordingly, helping to mitigate the impact of inflation on your business.

“Look at the wider economic environment we’re working in,” said Hester Scotton, CFO at Law Debenture.

“There are challenges in managing inflation, passing costs on to your customers and managing your workforce’s expectations of rising costs.

“You have to ask yourself whether you’re using your people better to deliver better returns for investors and shareholders.”

2. Financial planning and analysis can drive innovation

As the world continues to navigate the aftermath of the pandemic, it’s become increasingly clear that the finance function plays a crucial role in sustaining innovation and driving growth.

The digital age has ushered in a new era of business needs and expectations, and companies need to adapt quickly to stay competitive.

But which finance function is best suited to lead the charge regarding innovation?

It could be financial planning and analysis (FP&A), an essential function that helps you make informed strategic decisions

In one of the World Finance Forum’s headline presentations, Abby Obomighie, CFO: Europe Finance Director – Projects at Honeywell, said FP&A teams are well positioned to take an active role in driving innovation, regardless of team size.

Abby explained that an FP&A strategy needs a comprehensive framework encompassing the 6 Ps: people, processes, performance, positioning, perseverance and passion.

• People: A successful FP&A team needs skilled professionals with diverse expertise, including financial analysis, data management, and strategic thinking. Building a team with the right mix of skills and experience is essential for delivering effective FP&A insights.
• Processes: Streamlined processes that incorporate best practices, automation, and data-driven decision-making are vital for ensuring the efficiency and accuracy of FP&A activities.
• Performance: Measuring and tracking the performance of FP&A initiatives helps you identify areas for improvement, optimize resource allocation, and demonstrate the value of their financial planning efforts.
• Positioning: Aligning FP&A activities with your strategic objectives ensures that you focus financial planning efforts on driving meaningful outcomes.
• Perseverance: A commitment to continuous improvement and adaptability enables FP&A teams to stay relevant in a rapidly changing business environment.
• Passion: Cultivating a passion for financial planning and analysis encourages team members to embrace their roles and contribute their best efforts toward achieving your business goals.

Build a Finance Innovation Lab

Abby said it was important to foster talent, learning and development. You may want to think about creating a Finance Innovation Lab—a supportive environment that encourages experimentation and collaboration.

You can do this by:

• Investing in the right talent by attracting, retaining, and developing professionals with the necessary skills and experience.
• Promoting a culture of learning and development by offering ongoing training, mentorship, and growth opportunities.
• Encouraging cross-functional collaboration to break down silos and facilitate knowledge sharing among team members.

By embracing the 6 Ps framework highlighted above and implementing a Finance Innovation Lab, your business can foster a culture of innovation and continuous improvement within the FP&A team.

How FP&A Drives Innovation

Abby outlined four ways your FP&A team can drive innovation in your business.

1. Scope expansion: Expanding the scope of FP&A activities to include new business areas, such as product development, marketing or operations, can help uncover novel insights and drive innovation.

2. Breaking silos: Encouraging collaboration across departments fosters a culture of innovation by allowing diverse perspectives to inform the financial planning process.

3. Mindset shift: Embrace a growth mindset and a willingness to challenge conventional wisdom that can inspire FP&A teams to explore new approaches and uncover innovative solutions.

4. Repeatable processes: Establishing standardized, repeatable processes enables FP&A teams to scale their efforts, quickly adapt to changing business conditions, and consistently deliver valuable insights.

This approach would enhance the overall effectiveness of FP&A, driving innovation and growth throughout your business.

3. 5 steps for a CFO to be the CEO’s strategic partner

The role of the CFO has evolved dramatically over the past few years, something highlighted by Huiming Chen, Commercial CFO—Europe Region, at Illumina.

By working closely with the CEO, the CFO can help to shape the company’s strategy, identify growth opportunities, and ensure you allocate financial resources effectively.

CFOs can no longer operate in a silo, focused solely on financial reporting and compliance. You need to be a strategic partner to the business, working closely with other executives to make key business decisions, drive performance and create value.

As the CEO’s closest ally, you drive growth, manage risk, and optimize financial performance. With your unique blend of financial expertise and business acumen, you’re well-positioned to play a critical role in driving success.

Huiming shared five key steps for a CFO to firm up their position as a strategic partner to the CEO.

1. Be the CEO’s co-pilot

As a CFO, you’re increasingly expected to act as the co-pilot to your CEO, providing valuable insights and guidance on strategic decision-making.

This includes evaluating potential risks and opportunities, identifying areas for growth, and offering sound financial advice to support your CEO’s vision.

By adopting a co-pilot mentality, you can ensure you’re in the best position to help the CEO to drive success.

2. Add value to other functions

You’re uniquely positioned to add value to various business functions, such as HR, operations and IT.

With your financial expertise and strategic mindset, you can provide valuable guidance on resource allocation, performance management, and other critical areas that will contribute to the overall success of the business.

3. Elevate your team to the next level

To become a true strategic partner to the CEO, you need to elevate your finance team’s capabilities, and foster a culture of innovation and collaboration.

This includes providing professional development opportunities, empowering team members to take ownership of their work, and encouraging cross-functional collaboration.

By nurturing talent and promoting a growth mindset, you can ensure your team is well-equipped to contribute to strategic business goals.

4. Influence and secure resources

You’re critical in influencing and securing the necessary resources to drive success. This includes not only financial resources but also talent and technology.

By articulating the value of their strategic initiatives and advocating for the resources you need, you can help ensure your business is well-positioned to achieve its objectives.

5. Communicate and reciprocate

Effective communication is critical to your role in building a strong partnership with the CEO.

This involves providing timely and accurate financial information, actively listening, and reciprocating the CEO’s ideas and concerns.

By fostering open and transparent communication, you can create a strong foundation for your partnership with the CEO.

In conclusion, as a modern CFO, you need to become a strategic partner to the CEO, adding value across various functions, elevating your team, influencing and securing resources, and maintaining effective communication.

Final thoughts on the World Finance Forum

What were the big takeaways?

Data and insight can drive business performance. Financial planning and analysis can drive innovation. The CFO has evolved to become the CEO’s strategic partner.

By embracing today’s responsibilities as a CFO, you can significantly contribute to your company’s overall success and drive positive change.

Ultimately, your ability to adapt will determine success in the coming years.