The evolution of the CFO drives transformational change

The future CFO report, published following a research study conducted by Xledger, reveals that a resounding 99% of CFOs have seen their roles evolve over the past three years, with 80% of these saying it has evolved significantly. However, 91% said they are feeling the pressure of this evolution.

You only need to look at one of the biggest business drivers to see how pivotal the CFO role is. Digital disruption is arguably the biggest driving force to impact long term business performance. Organisations of all shapes and sizes are being sculpted by new ways of using technology that will improve processes and performance and reimagine human roles. Central to this is an organisation’s ability to use data to inform decision making. Because of this, CFOs are pivotal in leading this change, developing and championing a strategy that meets the ambitions of the organisation whilst balancing risk and corporate governance obligations.

Evolving business models brings a reshuffle of responsibilities, but the role of the CFO is set to become the foundation. With data, CFOs can enhance the roles of individuals putting financial awareness to the forefront by connecting everyday business tasks with financial tracking and performance.

Xledger’s study indicated the responsibilities that are now within the CFOs remit – such as ‘modernising the finance strategy and processes’, ‘providing accurate learnings from the business’ need to pivot during the pandemic’ and ‘providing data driven forecasts and accurate insights’.

But some of the new responsibilities fall outside of the finance function such as ‘company culture and human leadership’ stated by 38% of CFOs, ‘connecting the business and identifying silos/inefficiencies’ stated by 37%, ‘providing accurate learnings from business diversion’, by 43% and ‘company ESG efforts’ cited by 31% of CFOs.

This broad mix requires new skillsets, adaptability and agility.

Whilst these responsibilities provide ample opportunity to affect company growth, there are some challenges to overcome first which, whilst easily remedied, are significant to this evolution. The research highlights that 91% are still carrying out repetitive and manual tasks as part of their main role and for 52% this takes up the majority of their week (20 hours+). But it’s not only a lack of efficiency that CFOs are currently contending with, when asked about their ability to forecast ahead, 37% said that they can only see up to three months ahead. A worrying 8% said that they can only forecast up to one month ahead.

It seems that there is a disconnect between the value that the CFO can deliver to the organisation and the way that CFOs themselves are being enhanced by technology. Historically repetitive and manual tasks are typical of the finance role – from invoice postings to expense claims handling – but these can overwhelm the finance team. Arguably, the evolution of the CFO is happening at such an accelerated pace, that if they are to lead change in their organisations, the need for automated technology is fundamental to this.

What is perhaps most interesting, is that the research found that the more senior you are, the more likely you are to be carrying out repetitive tasks, with senior figures averaging 25 hours per week, compared to 15 hours for other finance decision makers. This highlights not only the stresses of the CFO themselves, but of their whole team, given their inability to delegate these tasks. The frustrations and seniority differences are vital in informing the current dynamics, behaviours and commitments of the CFO role. If they are to evolve effectively, it’s evident that more support is needed to harness their strategic value.

When digging further into the study, there are some notable trends in terms of seniority and sector. For example, 38% of larger companies (5000+ employees) vs 28% of smaller companies (less than 50 employees) are frustrated by repetitive, manual tasks. This is likely a result of larger organisation’s needing more rigid processes in place than smaller, potentially more agile organisations.

It stands to reason that if the increasing weight of the role is not enhanced with the right tools and technology, it will lead to overworking, mismanagement and many frustrations that impact the day-to-day operation and, adversely, would be liable to stunt company growth.

The finance function is steeped in rich data. Whilst at the moment it’s clearly reliant on repetitive human data re-keying, it’s ripe for transformation. As a result, the CFO – and finance sector in general – stands to gain the most from automation capabilities.