The 4 Strategic Roles of Today’s CFO

Financial data is responsible for being the institutional memory of the company. It helps us identify ways to develop a strategy and make the right choices.

Today, a CFO should understand this crucial role of finances and use it to inform their decision-making. Only then can they truly be considered a strategic CFO

But what are the other characteristics of the strategic role of today’s CFO? Kent Thomas, a founder of Amplēo, shared some insight into this question at the 2021 Intermountain CFO Summit. We’ve summarized his thoughts below.

What Isn’t Strategic?

Before we get into what makes a strategic CFO, it’s worth mentioning which activities are not strategic.

  • Creating accurate financial statements by the beginning of the following month
  • Clarifying the duties and responsibilities of their accounting and finance teams
  • Distributing annual budgets ahead of the upcoming fiscal year
  • Conducting regular meetings with department heads to discuss finances

Why don’t these tasks establish a strategic CFO? While they are essential for most CFOs to complete, they are not future-oriented. Just as it’s hard to drive while looking at the rear-view mirror, CFOs cannot be strategic by only looking at what they’ve already done. 

Now, let’s talk about what it looks like to succeed as a strategic CFO.

What Makes a CFO Strategic?

What role do you fill as a CFO at your company? The answer is broader than the general understanding of what a CFO does. Thomas suggests the CFO’s role in strategic planning can actually be divided into four different titles.

1. The C-Suite’s Strategic Financial Partner

Every business’s c-suite (the executive level of the company) needs a business partner who can implement financial strategies and anticipate their executive’s needs. These are the primary strategic responsibilities many CFOs quickly adopt when starting at their company.

How to Fulfill This Role

  • Automate everything: If you haven’t automated your manual processes yet, you’re already falling behind. You can easily automate tasks like completing regulatory compliance and creating timely and accurate reports. 
  • Adopt a “service provider” mentality: CFOs should want to ensure executives are happy with their financials and/or the information they’re receiving about those financials. 
  • Offer unbiased analyses: CFOs should not be yes-men or women. Therefore, they must be straightforward about their findings: “This is what we need to do, and this is how we should do it.”

2. The Chief Future Officer

CFOs ensure that a company can survive. Therefore, they need to be focused on the company’s future and growth strategies. 

How to Fulfill This Role

  • Support profitable planned growth: CFOs must know how to spend money to make money and optimize their cash flow management. This means accruing and allocating capital to places that can inspire growth.
  • Overcome or relax constraints: Every company today faces major constraints. For example, hiring hurdles put up by COVID-19 and an increasing desire to work remotely has led many companies to become fully remote. It’s the job of the CFO to help discover creative ways to alleviate the burden of these constraints.
  • Manage risks: Industries are always disrupted and challenged. It’s up to the CFO to either identify those disruptions/risks ahead of time or know how to navigate those changes when they arrive.

3. The Chief Trust Officer

You have to be trustworthy. While this should be the case for every member of the c-suite, it is particularly imperative that the CFO, the arbiter of financial information, is transparent, honest, and accountable.

How to Fulfill This Role

  • Be honest and humble: Acknowledge what shortcomings were your fault. Likewise, be humble enough to recognize team efforts when you receive praise. This inspires confidence in the employees you lead and the executives you work beside.
  • Hold others accountable: You must be willing to stand up to the CEO, as well as other executive members, and hold them accountable for their actions and choices.
  • Build loyalty and commitment with outside stakeholders: Too often, CEOs are not honest with their vendors, suppliers, and other stakeholders because they are afraid to be the bearer of bad news. CFOs, on the other hand, must continue to be honest with these stakeholders and build a strong rapport with them to produce a long-lasting relationship.

4. The Board Advisor

This is a role that many CFOs may not consider, but it is just as crucial as the other roles we’ve mentioned. Why? Because other board members will look to the CFO to really understand what’s going on within a company.

How to Fulfill This Role

  • Honor your fiduciary responsibilities to all shareholders: For all outside investors, you need to ensure each person receives their money’s worth. For example, if one of your series B investors tries to take punitive action that can negatively affect other investors, it’s your responsibility to call that out.
  • Build relationships with each board member: Again, you want to have a serviceable mindset. Get to know each board member, take them out to dinner, and get to know what they want out of the company.
  • Call out elephants in the room: There will be plenty of awkward topics to broach during your board meetings that no one will be willing to talk about. Since CFOs have the financial context for these problems, they should be the ones to bring it up.

Become a Strategic CFO in Your Company

By focusing on these four roles, CFOs can become the strategic partner every company needs to stay competitive and afloat.

Is your company looking for a CFO that exudes these qualities? Look no further: Amplēo’s outsourced CFO services will help you find the perfect candidate to support your executive team.