The traditional role of the chief financial officer bears little resemblance to that of the 21st century CFO. At one time in the not too distant past, the primary function was the creation and analysis of financial statements. While these tasks have not diminished in importance, advances in computerized accounting have relieved the need for the CFO to personally spend time on these endeavors. In fact, the exponential increase in the influx and availability of data has transformed not only how the CFO functions within an organization but also the basic structure of the organization itself. These three trends will soon be a reality for many businesses, if they have not already been implemented.
Look for the CFO to be more of a “predictor” than a “reactor”
Producing financial reports and gleaning information from them is no longer sufficient. In addition to analyzing the collective work of others, the CFO in 2020 will be required to apply critical thinking skills to augment his or her financial prowess to push the organization further along the pathway to achieving its goals. One example is the current trend by many companies to move to a rolling forecast for their budget. Rather than the traditional approach evaluating their budget at year’s end and seeing what worked and what didn’t and starting all over, rolling forecasts are continually updated and decisions are dynamically made with no set ending period.
Look for the CFO to absorb many or all of the duties of the COO
This trend can be attributed in part to legislation in 2002 in response to the financial crisis created by the accounting scandals of major companies like Enron. The mandated audit controls and reporting placed the CFO in a position that required more day-to-day oversight, the traditional role of the COO. Many companies have entirely eliminated the COO position, which is reflected by the trend towards many CFOs with MBA degrees rather than the once more common CPA status.
Look for the CFO to be a strategic partner to the CEO
All this has elevated the CFO to a much more important position in the company than ever. The automation of many financial work tasks has allowed the CFO to have the time to identify the important issues facing the company. Armed with the ever-flowing data and business acumen to understand opportunities, the CFO can work hand-in-hand with the CEO to take action and lead change.
The managers of Spinnaker Investment Group act as your personal CFO as we navigate the complex world of financial management. Let us show you how we can help you achieve your financial goals. Contact us today.