The CFO’s Role Is Bigger Than Just Finance. Here’s How.

There is no single definition of the modern Chief Financial Officer role. In some organizations, the CFO remains primarily responsible for accounting, financial planning, treasury and tax. In others, the role extends into legal, technology, risk, insurance, collections, strategy and operating functions.

Across my own CFO roles in construction and financial services, I’ve approached the role differently in different contexts. The breadth of exposure to other parts of the business from my vantage point has shifted depending on the needs of the business and my ability to contribute and add value. 

The modern CFO has the ability to engage in core business needs, revenue, capital, risk, operating performance and investment decisions. These are functions that ultimately intersect with finance, which gives the CFO visibility and exposure. 

The opportunity is to use the expertise and the vantage point of the CFO function to embed more deeply into parts of the business that are non-traditional, with the expressed intention of improving business results.  

The commercial engine

Sales is one of the areas where the CFO has traditionally reviewed revenue forecasts and pipeline reports, but leaves the fundamentals of the function to sales experts. The CFO should dig deeper to understand how pricing decisions are made, what incentives are driving sales behavior, which customers generate attractive economics and whether the company is optimizing for revenue growth, margin, customer lifetime value or just unstrategic volume. Many of those segments and priorities produce very different outcomes. 

The same principle applies to product development and innovation. Finance is often brought into the process after a team has already developed a proposal, built support around it and determined how much capital it wants. By that point, the consequential assumptions have already been embedded in the business plan. The CFO can create more value by engaging early to help shape the investment, define the initial risk profile, establish milestones and clarify the economics in the strategy. 

Businesses are fueled by three primary concepts, including processes, people and products. The products or services are the core vehicles of the business and require a robust sales operation and strategy to lead to commercial success. The best CFOs understand sales and product development despite those not being traditional skill sets of the function.

Operations

One of the most important lessons I’ve learned across industries is that financial reporting can only reveal so much about a business. You can understand that a problem exists by looking at a financial statement, but discerning why it exists can be convoluted or unclear. In construction, for example, financial performance ultimately depends on labor productivity, material expense, project schedules, change orders and project scope. Financial services operate differently, but there are similar themes. Capital, credit quality, servicing efficiency, technology and a range of other operating decisions can have an impact on the financial statement. 

That means that a good CFO would recognize that when a KPI moves in the wrong direction, the next step should be to understand the process that produced it. Talk with the people doing the work, trace transactions from beginning to end, identify where rework or delays are occurring, and determine whether systems or processes are creating avoidable costs. A variance report is valuable because it tells the CFO where to look, but operational understanding is what allows the CFO to help determine what needs to change. 

I have a firm belief that all functions are technology functions and that all professionals are technology professionals, including financial professionals. The CFO should understand how major technology investments are expected to change operations. The CFO should understand whether systems investments can reduce manual work, lower risk or improve decision-making. Finance can add significant value by helping define outcomes before implementation and ensuring that the organization measures whether outcomes are achieved. 

Strategy

Finally, strategy is an area where CFOs should play a much more active role because strategic decisions almost always involve competing claims on capital, management attention and organizational capacity. Growth plans can sound compelling, but every new market, acquisition, product release or transformation program creates tradeoffs elsewhere in the business. The CFO should understand what resources are required to implement a strategic plan, what capabilities the organization has built in, who will deliver on that plan and the opportunity cost of not pursuing other goals. 

None of these tenets reduces the importance of the CFO’s traditional responsibilities in finance, accounting or audit. Accurate reporting, liquidity, controls, disciplined financial management and sound risk oversight remain foundationally important to the business. But those capabilities should be the foundation of CFO leadership, not the limit. The CFO should be engaged in the entire business in order to understand how major parts of the enterprise work together. 

The ultimate measure of the role should be broader than the finance function alone. A modern, effective CFO should be a core reason the business works better.

There is no single definition of the modern Chief Financial Officer role. In some organizations, the CFO remains primarily responsible for accounting, financial planning, treasury and tax. In others, the role extends into legal, technology, risk, insurance, collections, strategy and operating functions.

Across my own CFO roles in construction and financial services, I’ve approached the role differently in different contexts. The breadth of exposure to other parts of the business from my vantage point has shifted depending on the needs of the business and my ability to contribute and add value. 

The modern CFO has the ability to engage in core business needs, revenue, capital, risk, operating performance and investment decisions. These are functions that ultimately intersect with finance, which gives the CFO visibility and exposure.