An Effective CFO Sets the Course and Navigates

Key Takeaways:
  • The modern CFO plays a pivotal role in shaping company strategy, driving innovation and fostering agility—far beyond traditional financial oversight.
  • Leadership, communication and adaptability are no longer optional. These “soft” skills are essential for CFOs to influence culture, manage change and guide teams through complexity.
  • For growing businesses, outsourced CFOs provide flexible, high-impact support—solving immediate financial challenges while aligning operations with long-term strategic goals.

 

Perhaps more than any other C-level function in a business organization, the role of the Chief Financial Officer (CFO) has evolved and expanded in recent years to become a strategic advisor who helps set the course for technology, innovation, agility and company culture. No longer strictly focused on financial matters, the CFO is a key partner in executing plans for growth and change in a company.

Some people adapt to these changes and new roles more readily than others, and the process of learning and embracing new skills can take time. But it’s important for anyone in the CFO role – or anyone about to step into that role – to understand that time is of the essence. Technologies and processes that were trends just a few years ago – such as artificial intelligence (AI) and automation – are now foundational to the success of many companies.

As a result, today’s CFO must possess skills that go beyond financial and accounting know-how. While CFOs still must be strong financial professionals focused on keeping their companies healthy and mitigating risk, they must also understand:

  • Strategic planning – To be a true partner to the CEO, the CFO must understand the vision. Where is the company going? What are the growth goals? If the goal is to grow from $5 million to $10 million in the next three years, how will the company get there? It is up to the CFO to draw the roadmap. To do that, the CFO must have an understanding of operations, human resources and technology as well as financial modeling and forecasting.
  • Risk management – CFOs have been the major risk managers in their organizations for many years. But to bring enterprise-wide risk management to a strategic plan, one must understand risks that go beyond the financial. What are the weaknesses in the company’s supply chain? What new products or technologies may emerge that will compete with the company’s products? Is the company too concentrated in one or two marketplaces, and what are the vulnerabilities there?
  • Data analysis – Understanding your own internal financial and operational data is essential, of course, but there are many sources of external data that can also help draw a clearer picture of the company’s opportunities and threats. Understanding and synthesizing relevant external data can illuminate the potential benefits or risks of strategic business decisions for C-level leaders. Available tools and technologies such as AI, data visualization software and performance management software can help advance your data analysis to the next level.
  • Compliance – If your company is subject to government regulations or industry standards, the CFO often takes on the role of monitoring and responding to compliance issues if there is no compliance officer. Compliance knowledge can help inform decisions about strategic planning.
  • “Soft” skills – Leadership, communication, collaboration, adaptability, problem solving and innovation long have been thought of as “soft” skills among financial professionals. Perhaps the time has come to consider them survival skills. In an increasingly complex and fast-paced business environment, CFOs can’t truly serve their organizations by keeping their noses buried in spreadsheets.

How Did We Get Here?

The changes in the CFO’s role began more than 50 years ago in large corporations, when increasingly complex financial regulations and financial reporting standards impelled companies to become more strategic in their financial management. With the adoption of computer technology by companies of all sizes in the 1980s and 1990s, the CFO’s role expanded to ensure that technology adoption was strategic and efficient.

With the explosion of financial and accounting software and the growing complexity of operating businesses in the 2000s, the CFO’s role has expanded even further. New technologies bring new capabilities to many companies, enabling operational expansion, market growth and internal efficiencies that were not envisioned even a few years ago. Someone has to evaluate how those technologies can help advance a growing company’s strategic plan, and implement them.

That’s the CFO.

But it’s tough for many smaller and medium-sized companies to find CFO candidates who possess the skills and broad adaptability to fill the job and take growing companies where they need to go. As the intricacies of doing business have become more complex over the past couple of decades, the number of qualified CFOs has declined.

Fractional CFO Services

The concept of fractional CFO services – provided on an outsourced, as-needed basis by accounting firms – has grown in recent years to answer the shortage of financial professionals at all levels, such as AP/AR and controllers, as well as CFOs.

Outsourced CFO-level professionals can help a company sort through the myriad of technologies and strategies for growth, including evaluating the technology products that incorporate AI and determining which ones can help your business reach the next level.

Business operational excellence can’t happen if you don’t have your house in order today, so the first priority of an outsourced CFO is to solve the immediate problems, then start looking forward. Working with an outsourced CFO is a bit different than having an in-house CFO:

  • For most companies, an outsourced CFO is engaged for a certain number of hours per month, during which meetings may focus on strategic planning, discussions about growth and optimization, or designing digital dashboards that can help the CEO track key performance indicators.
  • At the start of the relationship, the work may focus on solving major issues. Perhaps your business has stockouts or demand forecasting shortfalls with its inventory system. Solving those problems is a priority. But once they are solved, minor tweaks may continue during the optimization process.
  • The goal is progress, not necessarily perfection. But the end result will be a stronger company that is positioned for growth and able to maximize opportunities in the marketplace.

A good CFO will help the CEO get the company from where it is to where they want it to be. Sometimes, that means saying hard things that the CEO doesn’t want to hear. That’s where the CFO’s communication and emotional intelligence skills make a difference. To be an effective advisor, you need to be honest and insightful.

If you would like to discuss the role of the CFO in your organization, contact an Adams Brown advisor.