Byline: Mohamed Chaudry, Group CFO of FoodHub
Traditionally, the role of the Chief Financial Officer (CFO) has been unambiguous. As the senior executive responsible for managing a company’s financial actions, the CFO tracks cash flow, provides financial analysis and planning, and takes evasive action when things aren’t looking quite right. It’s a role that hasn’t been around that long – the first companies began appointing CFOs in the mid-1960s. But until recently, little in the remit of the CFO had changed. As we’ve moved through the first two decades of the 21st century, however, CFOs have slowly begun to take on other duties, adopting responsibilities once the concern of other senior professionals. Now, with COVID-19 necessitating significant structural changes throughout the corporate ecosystem, and the shortening boom-bust cycle we’re experiencing, what does it really mean to be a CFO? And what skills now lie at the core of the role?
How the Role of the CFO is Changing and Why
What is expected of today’s CFOs?
While financial acumen remains essential to the contemporary CFO, it is no longer enough for the successful fulfilment of the role. Real business perspicacity is required too. As is technical understanding – because as quickly as the CFO role is developing, technology is changing even faster. And it is impacting the very core of the CFOs responsibilities. While knowledge of banking and investment used to be enough to get by, anyone wishing to hold the role today also needs to understand the changing face of the payments industry. Not just cognisant of the fact that payment gateways and the like exist, but possessing a real understanding of how to identify the best for your company’s needs, how to implement those choices so that there is minimum disruption to your company and your customers. And that’s just the start.
Technology and the CFO
In my role as Group Chief Financial Officer of FoodHub, tech plays as much of a role as financial ability. A simple example would be applying Sage ERP – an essential of the job that now requires an understanding of operating not just one entity, but multiple operations, multiple departments, multi-currencies, different jurisdictions and taxes – and how all of that impacts the platform on a technical and developmental level. Hacking and data protection are integral to every element of the process. A completely firm grasp of cloud technology and how it can assist the growth and reduce the overheads of a business is essential. And when dealing with developers, CFOs must understand what is being undertaken, its potential to impact the business, and the associated risks.
While many of these concerns would also fall within the remit of a CTO, the CFO must be involved in the processes in order to accomplish their objectives. This has led to a fluidity within the roles, where responsibilities are intermingled, and C-level roles somewhat merging.
It’s not just technical either, there’s a huge emphasis on operations too. In a high growth technology business I am involved in tackling operational problems relating to Human Resources, Marketing and Legal compliance. The role is no longer just about simply monitoring, but becoming actively involved in, pushing for efficiencies and cost cutting. FoodHub employs 800+ staff and my role also includes monitoring staff and operational benchmarks as well as involvement in implementing new policies and procedures.
Why is the CFO changing?
The simple answer to that question is, ‘through necessity’. As discussed, technology, in particular, has influenced the CFO role. As it develops, it influences everything it touches. Operating models are becoming increasingly complex, stakeholders now have completely different requirements. But tech is not the only instigator of change. There are environmental factors too.
The global economic downturn of 2009 saw CFOs firefighting as the boom and bust cycle shortened. And it’s continued to shorten since. Prior to that time, the typical boom period was +10 years. Now, it is approximately 8 years and reducing. The runway is shorter, meaning that CFOs need to be as much about strategy as accounting. Planning for diversification in order to weather out the bust following a short burst of growth is as important as being able to take control of the company’s accounts. And at the moment, we’re working through another seismic event that will have its bearing on the role of the CFO – COVID-19.
How has Covid-19 impacted the role of a CFO?
Covid-19 has changed so many things. For the CFO it means stepping up another gear. Not just planning for stock control, but understanding whether the business can weather another lockdown, or further consecutive lockdowns. It means fully understanding your industry and making the decision about whether it’s possible to accelerate growth, or if it’s time for an inevitable slow down. It’s about searching for means of diversification, and forward planning to not just prepare for further Covid repercussions, but preparing for the next big scenario too, calculating what that might feasibly be, and how your business can survive.
At present, best estimates are that COVID-19 will impact businesses for 3 years or more. Company survival will depend very much upon the CFOs actions right now.
The future of the CFO?
Since its creation, the CFO’s role has always been integral to the success of a business. The changing expectations associated with the role now makes it even more important. But it begs the question of what the future of the role might be. Based upon my experiences, I can only predict a further blending of the roles. The jury is still out as to whether C-level roles can or should be merged and the effectiveness of those changing roles in a fast paced SaaS business. However, one thing is certain, the skills needed in the roles do overlap and as successful CFOs, we need to adapt, learn, pivot with the changing world. Only that way can we hope to do the best for the companies in our care.