It was {that a} chief monetary officer’s major focus was on the standard capabilities of the job: monitoring money stream and monetary actions; serving as a controller and accounting knowledgeable; limiting pointless spending; and making certain that monetary choices conformed to plain working procedures.

These duties are nonetheless important, in fact, however they’re more and more changing into secondary to the strategic roles CFOs are being requested to play. Because the tempo of enterprise accelerates and expertise advances, the fashionable CFO should take a broader, extra forward-thinking and growth-oriented strategy to the job.

The consulting agency Accenture captured this transformation in a 2022 survey, discovering that typical finance chiefs now spend most of their time spearheading companywide efforts to remodel and optimize enterprise operations, with an emphasis on accelerating income and revenue development.

It’s a brand new actuality that I’ve seen play out amongst fast-growing small and medium-size healthcare corporations the place I’ve held various management positions. These firms not solely anticipate you to be a practical CFO, delivering on fundamental accounting tasks, in addition they anticipate you to be a strategic CFO, working with the management staff to discover development alternatives and maximize profitability.

So how do you develop this strategic experience? By means of trial and error, I’ve discovered that the simplest means is to focus in your current finance capabilities and tasks—these capabilities which might be already inside your purview as a CFO—and elevate them to ship the strategic perception your organization wants.

On this article, I share six areas the place I like to recommend you focus. The event of the talents I focus on might be utilized broadly to development firms and employed throughout a large spectrum—by fractional CFOs working with later-stage startups, by interim CFOs in distressed conditions, and even by finance chiefs employed by public firms.

In the case of increasing and bolstering your current capabilities, I focus on the best areas first. The later ones, particularly company imaginative and prescient, will most likely devour extra of your time, however I anticipate you’ll discover that mastering them is nicely price it to you and your organization. I embody examples to indicate you ways I put every of those ideas into motion.

1. Reporting and Forecasting

Reporting and forecasting are desk stakes for a finance chief. The proliferation of software program as a service (SaaS) and cloud providers has made it simpler and cheaper to combine highly effective accounting programs throughout a company. A practical CFO should make sure that everybody who wants entry to those programs has been totally onboarded and is utilizing them, whereas a strategic chief appears to be like for alternatives to delve deeper into the knowledge to floor actionable insights for the group.

I can greatest clarify how you can develop this space by sharing how I demonstrated to at least one firm that totally onboarding a staff is a necessary step—even for management. I labored for an early-stage healthcare providers firm the place the CEO tracked company financials on an Excel worksheet he saved on his desktop and up to date at night time and on weekends. This observe created apparent issues. First, his shadow financials have been usually incomplete. Second, his observe brought about a disconnect that prevented the finance staff from creating a routine of updating info and producing helpful and well timed insights for the CEO. With out this routine, the CEO was flying blind when it got here to gross sales and profitability decision-making.

Once I joined, I helped the corporate standardize all of the accounting, operational, and monetary reporting templates, and the chart of accounts. The corporate and I then agreed on a reporting calendar for when the finance staff would give the CEO and board the most recent earnings assertion, steadiness sheet, money stream assertion, and customer- and product-level segmentation. That report additionally commonly supplied info on the efficiency of particular person departments, evaluating the figures for every with that division’s funds, forecast, and prior-year numbers.

We didn’t cease with standardizing companywide reporting, nevertheless. We leveraged the knowledge to advocate operational modifications that might enhance areas of economic underperformance. This not solely freed up the CEO’s nights and weekends, but in addition gave us strategic perception into the corporate’s operations whereas lowering the administration staff’s nervousness and stress beneath the earlier fragmented reporting system.

2. Monetary Planning and Evaluation

The subsequent logical step for a strategic CFO is to search for methods to use standardized databases and quantitative abilities in monetary planning and evaluation. FP&A is often used to supply data-driven solutions to monetary and operational efficiency questions dealing with any side of the corporate. Some are routine analyses, reminiscent of evaluating the present interval’s efficiency to the prior one’s, whereas others are advert hoc analyses reminiscent of calculating the return on funding for a brand new gross sales enablement expertise platform. A strategic CFO makes use of the identical processes and should deal with among the identical questions as a practical CFO however takes a extra proactive strategy.

Once I joined a pharmaceutical producer as CFO, I discovered that few of the corporate’s senior leaders knew which buyer, product, or geography generated the best development or income. This turned an issue when the corporate needed to rapidly enhance profitability. After implementing fundamental reporting enhancements, I performed a complete profitability evaluation of the corporate’s a number of enterprise and buyer segments to start to reply broader strategic questions.

Utilizing FP&A enterprise intelligence instruments like Microsoft Energy BI, we pinpointed the sources of the best development and the best earnings and losses. We then broke them down by product class, product SKU, buyer, enterprise unit, and geography. However we didn’t simply produce a report that sat in colleagues’ inboxes. We looped in cross-functional groups to assist us design, develop, and glean insights from the experiences, and hosted in-depth conversations with government leaders of every practical space about industrial and operational modifications that might maximize monetary efficiency.

Inside a short while, the corporate had a holistic understanding of which segments contributed earnings. Simply as vital, we had full alignment amongst senior leaders that we should always deal with essentially the most worthwhile segments. This technique allowed us to just about double the corporate’s profitability in lower than a yr.

3. Danger Administration and Mitigation

If finance leaders thought threat administration was simply an administrative footnote to monetary oversight, then the COVID-19 pandemic and breakdowns in world provide chains upended that false impression. As we speak, CFOs should take a task in pushing groups throughout the group to make threat assessments and commonly deal with questions of mitigation. On the identical time, they should see threat administration by means of the prism of alternative, on the lookout for the place it creates potential industrial openings.

For instance, from 2017 to 2020, I used to be liable for a gaggle of firms that imported important parts for medical merchandise to China or assembled them there. The businesses loved cross-border, lower-cost arbitrage and persistently expanded gross margins for a few years. Nevertheless, once I joined, I might see operational, regulatory, and macroeconomic dangers on the horizon. We engaged senior leaders in thought-provoking quarterly discussions to anticipate doable hazards so we might dedicate assets and take motion to mitigate essentially the most urgent materials dangers. The groups persistently highlighted the doable operational and monetary dangers of cross-border commerce boundaries disrupting important element shipments.

This proved prescient when a commerce battle flared up between the US and China in 2018. As a result of we have been ready by means of our threat planning, my group of firms was capable of reduce provide chain disruptions by leveraging backup element sources in different components of Asia and Europe. Integrating threat administration into the corporate tradition allow us to not solely scale back or neutralize dangers, but in addition restricted impression on the underside line, creating industrial alternatives for our gross sales and advertising and marketing groups to extend market share. We continued reliably delivering merchandise and options whereas our opponents have been nonetheless dealing with disruptions.

4. Digital Transformation

It’s routine for a CFO to ask division heads to do extra with much less. Finance chiefs can prepared the ground by doing so themselves, analyzing methods to automate back-office operations to free workers from repetitive duties whereas saving money and time. Automation also can assist the finance division because it offers with the fixed cycle of labor spiking inside tight timetables: month-to-month closes, pressing evaluation requests, and the crunch interval round mergers and acquisitions. Being perpetually in need of arms and hours inevitably results in excessive ranges of stress.

I discovered how obligatory this transition was firsthand. After a reorganization at a worldwide manufacturing agency, my finance staff was staffed with simply two enterprise analysts. This lean staff was liable for reporting and analyzing monetary outcomes for 25 portfolio firms each month inside two enterprise days. It merely wasn’t possible for 2 individuals to finish this spreadsheet-based copy-and-paste undertaking inside 48 hours. Automation was the one resolution.

We invested a small quantity into robotic course of automation to deal with routine reporting processes and restructured the staff’s strategy, serving to the 2 analysts develop into consultants in enterprise intelligence and visualization programming. Utilizing these applied sciences, the 2 have been capable of full the reporting duties in a single working day. They used the time they saved to undertake evaluation and work with enterprise leaders to enrich the reporting with actionable insights.

Seizing on these learnings, our company improvement groups took an analogous strategy: They automated their month-to-month outreach, permitting them to contact 10 occasions the variety of potential acquisition targets and thus domesticate a bigger accomplice pipeline.

5. Expertise and Tradition

One helpful means a CFO can take a extra strategic function is by changing into extra immediately concerned in recruiting and cultivating expertise. As an alternative of simply advising HR on staffing necessities, a strategic CFO will accomplice with HR to create alternatives to carry high-performing monetary expertise into the group.

As an example, I as soon as helped recruit a really gifted government to a small healthcare gadget manufacturing firm that my agency owned, though I knew we have been going to promote it inside the subsequent yr. We requested this particular person to hitch because the vp of finance, stabilize the corporate, and efficiently full the sale—though we didn’t have a particular function lined up for him afterward. This could have been a tough promote had we not approached this candidate with transparency, honesty, and a dedication to retaining him in a senior function.

A yr after the sale, we delivered on the dedication and he turned CFO of our largest portfolio enterprise. Three years later, he was promoted to be the holding firm finance chief, overseeing all portfolio firms.

As CFO, taking an energetic function in creating a high-potential finance chief meant I used to be contributing to the corporate’s long-term technique by serving to to safe an worker who might steer the corporate in a post-sale future. Whereas all of this transpired within the finance division, others in numerous practical areas seen and adopted comparable approaches to recruiting and cultivating high-potential expertise in gross sales, advertising and marketing, operations, and expertise.

6. Strategic Planning

Corporations worth the arduous information and empirical mindset {that a} finance chief lends to strategic planning. The CFO can use this as a chance to contribute to the transformation of an organization’s industrial targets or capabilities, as an illustration, by championing acquisitions or introducing partnerships to increase aggressive benefits.

I had the chance to place this into motion whereas working with an rising markets cardiovascular diagnostic firm that made coronary heart displays. The corporate had aggregated terabytes of coronary heart rhythm information by means of the hundreds of units it had offered. This information was a singular asset, however the firm didn’t use the knowledge for any industrial functions. As CFO, I thought-about any giant supply of distinctive information as a potential alternative in a world the place SaaS enterprise fashions might be commercialized rapidly.

I challenged the staff to make use of that information as the idea of an analytics service whereas defending affected person confidentiality. After months of improvement with native software program companions, the staff unveiled a brand new service to hospitals to offer real-time monitoring, evaluation, and alerts if the software program detected irregular rhythms in a affected person. The service deepened buyer relationships and added a extremely worthwhile income stream.

With better visibility and deeper insights concerning the firm, the strategic CFO develops a viewpoint about what merchandise, capabilities, and M&A alternatives can create transformative worth for his or her firm. But it’s vital to remember the fact that what really elevates your contribution to a development firm comes all the way down to management.

The demand on corporations to fulfill targets is immense, particularly as macroeconomic pressures rise and enterprise capital, personal fairness, and public market expectations for monetary efficiency proceed to climb. Corporations want management, and leaders should ship development. The strategic CFO is uniquely empowered on this respect. When the fashionable CFO rises above their practical tasks and supplies helpful strategic insights, they may also help their firm rework and develop for the long run.