Careers

The CFO – Your Time Has Come

The role of the CFO is now paramount to a company’s success. So we take a look at a recent ACCA report that outlines how finance departments are taking the lead

There is little doubt that the current economic climate has raised the finance chief’s internal profile, according to ‘The CFO’s new environment’, a recent report from the ACCA. Cash and liquidity have shot up the agenda and a host of other activities have been placed under the microscope – from capital expenditure to remuneration and bonus packages.
With finance now the key to success, CFOs are receiving more support from the board. Their workload has also increased and the finance department is being stretched in all directions.
A more hands-on approach is being called for, with the accountants taking on the managerial role in business operations. Risk identification is key, but the list of monitoring duties is extensive. It includes:
• Staff numbers and workloads.
• Overhead reduction initiatives.
• Remuneration and bonus schemes.
• Capital expenditure decisions.
• Credit control and cash collection.
• Banking relationships.
Not surprisingly, non-essential investment is being delayed and even some essential investment has been put on hold. Capital spending decisions are more cumbersome as a mistake can be so costly.
Finance is being used for strategic planning by business units for both the long and medium-term. The fast-changing environment has also meant that both internal and external communication has been increased. It both reassures stakeholders internally and helps put external stakeholder (most notably supplies) in the picture.
The report says that the CFO’s star continues to rise and the survey found that 83% said the role of the finance chief was more important than it was a year ago.
Along with everything else there is the challenge of new levels of scrutiny. Increasingly, CFOs are turning to their professional body for help and training.
One of the main perceived skills gaps is in risk management. Finance teams need more guidance in this area, according to two-third of respondents. Unfortunately, the survey also found that 13% of CFOs are planning to cut back on training for the ‘soft’ skills of leadership, coaching and mentoring.
Making investment decisions has been made more difficult because of the uncertainty in the banking sector and the scarcity of capital. Added to this are the high levels of anxiety and uncertainty among shareholders, banks and other stakeholders. They want to know if the plan has real merit and that could mean fear rather than logic is driving some decisions. If all firms become risk-adverse then the ecomony will be in trouble.
So, finally, the finance function is doing some strategic thinking. It is, after all, what some of the exams were all about. And the impetus is coming as much from business units as from the finance team.
The need to have proper financial performance targets has helped. Companies have also had to take into account more opinions when formulating strategy.
This study shows just how important the CFO is to the success of UK plc. There is no doubt about how challenging the job is, as the severity of this recession may well be something many CFOs have never experienced. Despite this, the researchers found most finance chiefs were confident they had the skills and expertise to cope.
Some said that is meant a return to the basics – it was about being an accountant!

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