Chief financial officers are no longer relegated to being number-crunchers. They are true strategic partners.
Boards are increasingly relying on finance leaders to shape corporate strategy and mitigate risk. The C-suite expects them to be actively involved in strategic planning sessions, particularly in areas like M&A, scenario planning, and risk modeling.
If your organization hasn’t already pulled you into the fold on strategic matters, the time is rapidly approaching. Knowing what to expect and shifting your mindset will help you thrive in your redefined role. Here’s everything you should be prepared for.
The Shifting CFO Mandate
Boards now view CFOs as co-architects of long-term growth. After all, chief financial officers are members of the C-suite. They are finally being viewed as such.
Organizational leaders are relying on CFOs to translate financial data into actionable insights. This shift reflects the complexity of today’s business environment, which is marked by economic volatility, regulatory changes, and technological disruptions.
Key Expectations in Strategic Planning
Boards are raising the bar in three critical areas.
1. Mergers and Acquisitions
M&A activity remains a priority, with boards expecting CFOs to provide rigorous financial due diligence and post-merger integration plans. View yourself as the gatekeeper on M&A activity. It’s up to you to evaluate potential risks and opportunities so that the business can make wise acquisition moves and protect its long-term future.
In this new role, you’ll need to do much more than simply assess the financial viability of an acquisition using valuation models. You must also consider cultural fit and how an opportunity aligns with the company’s broader goals.
2. Scenario Planning
Economic uncertainty has made scenario planning indispensable. You can help your business navigate these hurdles by presenting multiple financial models, including best-case, worst-case, and most likely variations.
While these models are by no means infallible, they represent one of the best tools for preparing for the unexpected and delivering lasting value to your company.
You may be wondering, “Haven’t CFOs been involved in scenario planning for decades?” Yes, they have, but the depth of your involvement is what’s changing.
Not only will you prepare the reports that break down the potential outcome of each scenario, but you will also present your findings and participate in strategic discussions. That’s how the CFO role is changing.
3. Risk Modeling
Risk management has taken center stage. Your business faces more uncertainty than ever. Providing the board with sophisticated risk models that integrate financial, operational, and reputational factors informs decision-making and protects your business from ongoing uncertainty.
Challenges You’ll Face
Change can be hard. Adapting to these new expectations will require you to overcome some major hurdles.
One of the biggest barriers is the time constraints you are already dealing with. Think about all of the different operational duties you currently juggle. You’ll need to take on more work and become increasingly involved in meetings and planning processes.
The second major barrier is data silos. When information is fragmented, it can hinder the creation of comprehensive models. You need to eliminate these barriers so you can view the full picture of your organization’s financial health and derive relevant insights.
Third is communication. It’s your job to distill complex financial data into clear, actionable recommendations. This means sharpening your communication skills and transforming information into accessible reports that non-financial professionals can digest.
How to Adapt to Board Demands
Here are three tips to help you adapt to changing board demands:
- Use Advanced Analytics: Tools like predictive modeling software can unify your data and support scenario planning at scale
- Collaborate: Partner with CIOs and other executives to integrate data across departments
- Sharpen Your Communication Skills: Translate financial jargon into narratives that are accessible and actionable
Are you unsure where to start? Meet with the C-suite and tackle this challenge head-on. Discuss ways you can adapt to changing board expectations and what your plans are for making the finance department a strategic asset.
The Controller’s Role
Controllers play a vital supporting role. They are responsible for ensuring the data underpinning CFO strategies is accurate and timely. By optimizing close processes and implementing robust ERP systems, controllers enable CFOs to focus on high-level planning.
If you hold the role of controller, consider how you can support the chief financial officer as they step into a more strategic role. Get involved in planning and risk modeling so that you can also become a strategic asset.
Becoming a Well-Rounded, Indispensable Asset
Boards’ heightened expectations reflect your growing influence in corporate strategy. To thrive, you’ll need to sharpen your existing skills and turn weak points into strengths. This could involve investing in yourself, launching a training program for your finance department, or bringing in outside talent to bridge the gaps.
With the right support and resources, you can drive resilience and growth in an increasingly complex landscape.
