I often get asked this question: “Isn’t your role as CFO stressful?” It comes up second, just before the classic : “What is a CFO?”
I’ve seen my role change over the years that I have been doing it. But, before I delve into the seemingly simple question, with the complex answer, let’s review the second question first:
“What is a CFO” and I’ll add : “What do you do?”
The Chief Financial Officer or CFO of a company is generally also called the number’s person. But this quaint description is a bit dated in today’s world as the role of CFO is a lot larger than it was 10 years ago.
Ten years ago, the CFO was really the chief number’s person. The role was to oversee the accounting and financial affairs of the company.
It generally started with the following main tasks:
1. Oversee the accounting function and ensure that all the transactions of the company are captured in numerical form so that the president can understand if the company is making money or losing money.
2. Make sure the bank account is well managed and properly controlled and that nobody is stealing money.
3. Help the president draw up future numerical forecasts based on the company’s strategy and current actions/sales orders/etc.
4. Help manage the company’s stock/inventory or resource that is being sold and ensure it is correctly captured in numerical form in the accounting books.
Then the role started expanding in that of a counsellor/advisor:
5. Counsel the president on the strategy of the company and the current operating affairs in order to find ways to make more money.
6. Advisor the other business leaders (sales, marketing, etc) on ways they could help improve the profits of the company.
7. Participate in the construction of the future strategy of the company and current operating affairs to ensure the company is doing it’s best to maximise profits for all stakeholders and ensure all resources are being used in their best possible way.
As you work you way down the list you’ll see that the role has evolved to being much more strategic and all-encompasing.
The CFO of today is a strategic leader who plays an integral part in motivating teams, setting strategy and driving business growth.
The CFO advisors the president and other business leaders on operations and resource models.
The CFO is also a source of recommendations as to the course of actions to take in the day to day operations of a business.
The CFO is also still in charge of ensuring that the transactions of the company are captured correctly in their numerical form in the accounting records and that forecasts reflect the future best case operating affairs of the company.
The CFO of today is expected to be everywhere and it is in this form that the CFO can be most impactful. Given the CFO’s handle on the numerical representation of the company (the numbers) and the CFO’s knowledge of all the business operations/affairs and strategy, the CFO can be a major asset in helping identify levers to improve profitability.
Given the CFO of today is in demand at his/her company means that the role today comes with a fair amount of pressure. One needs to be responsive to the questions/demands and ever changing environment, as well as keeping the base accounting/finance tasks delivering. So the role of CFO can be stressful if looked at from that angle.
However, the role can be enormously exciting given the involvement across the company and the impact it can have on current and future business. When looked at from this angle the exciting part definitely outweighs the stressful part becomes .
As the demands rise on the CFO, the resource model that supports the CFO and the finance function needs to be in place to enable the excitment to outweigh the stress.
Corporations that expect the CFO to deliver on all of the above without adequate resources to perform are the same that believe their competition are nice guys who don’t want to beat them.
Investing in strong finance talent is crucial for the business of today and the CFO is a key player in business growth.