The Evolving Role of Today’s CFO
Corporate finance leaders face a rapidly changing business landscape.
Today’s chief financial officer is far more than a numbers
cruncher. Transformed by technological innovations, massive
data repositories, and challenging economic factors, today’s
CFO is a critical, strategic leader who effects change throughout
the entire organization. They are technological innovators, data
wranglers, and true change leaders.
“In a world where they must learn to do more with less, CFOs and
their finance teams are moving away from processing transactions
to analyzing them in order to make more insightful recommendations
to the business,” says Alok Ajmera, president and COO for Prophix,
a financial data software solution company.
The explosion of data and analytics is one of the main factors
propelling the CFO into a much more strategic role. Instead of
focusing on traditional corporate finance responsibilities, they are
devoting more bandwidth to non-finance functions.
“It has become the CFO’s responsibility to use the information
gleaned from the data to direct and guide management and to hold
key stakeholders accountable for the execution of their business
decisions,” says Joe Lopykinski, CPA, director for The Overture
Group, an executive search and compensation consulting firm. He
explains that while CFOs still oversee tasks such as accounting,
controls, budgeting, and financial planning and analysis, increased
insight into data has expanded the CFO’s jurisdiction to include
other, more strategic efforts.
With wider adoption and implementation of machine learning and
automation, CFOs no longer have to devote time to fixing error-prone,
manual data entry and reporting. Instead, today’s tech-enabled
CFO is empowered to gather and analyze data from both
internal and external sources, potentially in real-time, and can then
derive insights and make decisions that drive greater corporate
profitability. This emphasis on technology has altered the
foundational knowledge required of today’s CFOs.
“I have seen a real shift from just the traditional skill set to a
foundational understanding of available technologies, machine
learning and, to a lesser extent, AI,” explains Jon Lee, CFO of
Universal Synaptics. “At its root, CFOs and controllers alike are
realizing that financial health monitoring and oversight reduces to
cash and data availability.”
To illustrate how different technologies free the CFO from repetitive
tasks, standard ERP systems are currently available to provide real-time
insight into such metrics as inventory turnover and customer
lifetime value. Machine learning takes this insight a step further,
predicting the optimum time to re-order inventory and identifying
when it’s cost effective to re-engage a customer.
Automation can also assist with global visibility as compliance gains
in complexity, like when countries such as Mexico and Italy
implement strict rules for how invoices are transported from sellers
to buyers. “End-to-end automation that spans the full accounts
payable function can offer granular insight into days payable
outstanding on a month-by-month basis and per business unit, can
capture discounts effectively, and can forecast cash flow impacts
tied to a variety of functions,” explains Daniel Saraste, senior vice
president of strategy and innovation at New York-based
MediusFlow, an accounts payable automation platform.
Although technology has driven newfound efficiencies, the finance
function continues to be challenged to do more with less. “Finance
departments in many growing companies are becoming leaner
instead of growing in tandem with customer bases and expense levels,” Lopykinski says, further observing that the decrease in
human capital is often offset by increased investment in technology.
“Technology has, and will continue to have, an important role in the
success of finance departments.”
The shift away from human capital toward technology is often hard
to navigate, but it will almost certainly have a long-term impact on
the finance function. “While every evolution comes with challenges,
the good news is that implementing automation doesn’t just
save time and increase insight, it also reduces risks and costs,”
Ajmera says. “We will see even more change happen as
organizations adopt advanced artificial intelligence-powered
performance management software, which is emerging as the next
generation of automation.”
Ajmera predicts that this next evolution of finance will include the
advent of virtual financial analysts and a new era of planning and
analysis where financial professionals will have quick and easy
access to real-time data through voice and text that will drive even
greater efficiencies. Ajmera also believes that cloud computing has
the potential to streamline processes and reduce costs, once again
enabling the CFO and other finance leaders to focus on more
“Compared to traditional IT-managed, server-based software, the
cloud offers many benefits in security, scalability, increased
collaboration, affordability, and the ability to leverage AI. This is a
game changer for CFOs, giving them the ability to make accurate
predictions for faster and more insightful decision-making,”
Lee agrees, pointing out that the cloud has made technology
options less expensive, readily available, and faster to implement.
However, with that comes new challenges. Cloud-based
applications tend to be disparate and loosely connected, making
initial integration a significant effort, which is driving CFOs to work
closely with their CIO and CTO counterparts.
“The need for loosely connected applications creates an
information system ecosystem that creates value to the CFO and
controllers only to the extent that the information can actually be
quickly drawn down and consumed,” Lee emphasizes.
Furthermore, for CFOs to provide the data-driven explanations
demanded of them by shareholders, analysts, and other
stakeholders, they need to understand how various applications
actually perform. “They have to concern themselves with how
these applications perform quote-to-cash and procure-to-pay
cycles—and then translate those processes into value creation or
value destruction and understand why,” Lee says.
In line with the evolution of the CFO, the role of the controller is
also changing. Controllers are no longer confined to being report
generators. Controllers are stepping up and backfilling many
traditional CFO responsibilities and are becoming more involved in
data collection and analysis. According to a February 2019 survey
conducted by Dimensional Research, controllers are often
responsible for leading firms through specific technical changes,
such as business intelligence and data mining functions, digitization
of workflows, and integration of financial systems.
“Controllers are tasked with working with other business leaders
to gather meaningful data and then facilitating the flow of data
communication between these leaders,” Lopykinski says.
This evolution has also shifted the career path for many controllers
as they find their roles expanding to executive management, often
rising to chief accounting officers and executive peers to the CFO.
“Controllers are still generally charged with the traditional financial
package and historical data, but often act as interpreters to
operations and finance. Thus, they need to be fluent in the
language of accounting, operations, and finance,” Lee observes.
Interestingly, while technology has significantly impacted both
CFOs and controllers, it has also added work in other areas.
According to Dimensional Research, 78 percent of the finance
professionals surveyed reported that the time and effort typically
spent on IT management has increased over the past 10 years.
Technology is not the only factor driving change in the finance
function. Economic shifts, such as the lowering of tax and interest
rates, are also propelling finance leaders toward more strategic roles.
“Low interest rates mean that there are no risk-free returns,” Saraste
explains. As a result, organizations are pushed to invest money in
the stock market in order to generate reasonable returns, thus
assuming considerable risk and driving historically high valuations.
To this end, CFOs and controllers are championing strategic
initiatives to offset that risk. According to Dimensional Research’s
survey, 69 percent of respondents consider themselves risk
managers that oversee internal controls.
“With the onset of digital transformation, CFOs have begun to
embrace the role of technology to improve the visibility and control
of a company’s most valuable asset—cash,” Saraste says,
explaining that in pursuit of risk-free returns, many CFOs and
controllers are revisiting the concept of the early-pay discount.
Through early-pay discounts, organizations can monetize their
payables by paying invoices before the due date in exchange for
a discount on the invoice amount. With cloud-based accounts
payable automation, CFOs get the visibility, agility, and control
needed to secure the early-pay benefit.
“Accounts payable automation provides a level of control that
enables finance departments to pay invoices within a given number
of days. This allows CFOs to focus on capturing different types of
early-pay discounts, whether financed on a company’s balance
sheet or through a third-party,” Saraste explains. “The end result is
creating opportunities for turning accounts payable into a
substantial revenue center for the company.”
This type of automation also elevates the accounts payable staff to
a strategic level, creating increased synergies with the CFO. “No
longer is AP backlogged with paper and inefficient processes; they
have the tools and the time to take on more strategic roles, provide
valuable data to CFOs, and work with new technologies to drive
continued benefits for the entire business,” Saraste says.
All in all, the old way of doing things is incompatible with today’s
accelerated pace of business. CFOs and controllers that efficiently
leverage new technologies will be empowered to drive their
organizations to be more agile, dynamic, and successful. “It is the
combination of technology, automation, skills, vision, and relationship
building across the business that will make a bright future for finance,”
Of course, despite the substantial shifts occurring in the finance
function, the core qualities needed in today’s CFOs and controllers
are likely to remain, says Lee: “Uncompromising ethics, strategic
vision, and corporate finance and accounting competence.”