Role of the Chief Financial Officer (CFO)

Delve into the multifaceted role of the Chief Financial Officer and their evolving responsibilities in shaping the financial future of organisations.

The Chief Financial Officer (CFO) stands as a somewhat financial maestro, orchestrating the fiscal ‘symphony’ that guides organisations to success. Delve into the multifaceted role of the CFO, shedding light on their contributions to business growth, financial stability and strategic decision-making as well as their continued importance within the C-suite.

Role of the Chief Financial Officer (CFO): an overview

• Masters of finance: core responsibilities of the CFO
• Strategic decision-making
• Navigating the technology landscape
• A multifunctional finance executive
• Guiding the organisation's continuous improvement
• Finding a place in the C-suite

Masters of finance: core responsibilities of the CFO

The legal and official definition of the CFO is that they are the person responsible for the company’s finance and accounts.

Today that role and its responsibilities have considerably broadened. The CFO's primary role involves meticulous financial supervision, management and future modelling. 

Tasked with overseeing budgeting, financial planning and risk management, they essentially serve as the financial guardian of the organisation. Through adept budget management and strategic risk mitigation, CFOs ensure the company's fiscal health remains robust, fostering stability and resilience. 

Strategic decision-making

Beyond the usual number crunching, CFOs actively participate in strategic decision-making. Collaborating with top executives, they contribute to informed choices aligned with the company's long-term goals. By integrating financial insights into strategic planning, CFOs become instrumental in steering the organisation towards success.

McKinsey suggested that the CFO should also start thinking strategically about ESG: “The best CFOs approach ESG as a growth play. McKinsey research shows that more than 80 percent of C-suite leaders and investment professionals expect ESG programs to contribute more shareholder value in five years than they do today.”

Navigating the technology landscape

In the era of digital transformation, CFOs are having to digitise their own skills, work more closely with the CIO, and work harder to understand an increasingly changeable industry. Leveraging innovations, they streamline processes, boost efficiency and contribute to overall organisational agility. Embracing technology in addition to their core financial responsibilities, CFOs position their companies at the forefront of industry advancements, driving innovation and maintaining a competitive edge.

When highlighting finance technology trends in 2023, Gartner found that more than 90 percent of CFOs planned to increase investment in finance technology in 2023, “yet only 30% of technology projects succeed.” Additionally, more organisations were moving to the cloud for the majority of their finance applications, “By 2025, cloud-native platforms will serve as the foundation for more than 95% of new digital initiatives — up from less than 40% in 2021.”

A multifunctional finance executive

The Chief Financial Officer has historically enjoyed a central focus on maintaining quality control, adhering to regulatory requirements and generating as well as scrutinising financial reports. Despite these responsibilities growing in number, the regulatory side of the job is still as important as ever.

CFOs ensure the organisation complies with financial regulations. By managing legal compliance, they mitigate risks and safeguard the company's reputation. Proactive adherence to regulatory standards not only averts potential pitfalls but also builds trust with stakeholders, reinforcing the company's commitment to ethical business practices.

Guiding the organisation’s continuous improvement

The modern CFO is considered a transformative figure in business, evolving from a traditional finance executive to a strategic partner. In their role, CFOs proactively steer the business toward growth by predicting change, carrying out resource allocation and ensuring efficient execution of corporate objectives. 

Driving this organisational change involves ensuring that financial strategies support overall business goals. They also maintain a focus on developing the finance function with updated tools and skill sets to foster a culture of continuous improvement and efficiency. 

They also work on establishing key performance indicators (KPIs). CFOs measure and analyse company performance, producing metrics and data that provides insights into the organisation's financial health, as a result guiding strategic adjustments for continuous improvement. By focusing on KPIs, CFOs play a crucial role in shaping a culture of accountability, efficiency and adaptability, while ensuring the company remains agile and responsive. 

Finding a place in the C-suite

It is evident that the Chief Financial Officer has to juggle multiple responsibilities within their role, having to shape the organisation’s financial future by becoming a change leader, technologist, strategic decision-maker and a legal advisor, often second only to the CEO.

In a constantly evolving technological landscape, recognising and appreciating the multifaceted role of the CFO is paramount for fostering growth and resilience in the face of challenges. According to Deloitte’s CFO Signals™ Survey 4Q 2022, more than 40 percent of CFOs expressed their concern for their organisation’s financial outlook, considering challenges such as geopolitical instability and talent retention.

As a designated strategic advisor within the C-suite, the CFO observes first-hand on a daily basis the ins and outs of the organisation’s fiscal needs and wants. Despite staying on top of the latest advancements in the industry being one of the CFO’s main responsibilities, financial organisations are discernibly lagging in the utilisation and scaling of AI solutions according to Gartner.

CFOs now find themselves at a crossroads. Integrating AI into financial operations is not only a matter of staying competitive but a strategic imperative—at the same time, finance leaders believe that there are other priorities of more importance. By taking on a more positive view of AI as a strategic enabler, CFOs can utilise AI to drive efficiencies and plan for sustained future growth.