How can the CFO improve the finance team’s role and optimize its business impact?

A successful company is one which can add value to its various stakeholders. This requires the company to perform better than the current economic scenario, and peers in the same industry. This is only worthwhile when the company displays a robust, functioning and sustainable business model. In today’s age there are not many companies which can earn super normal profits, with time and with a relatively open economy it is the survival of the fittest. The sector opens up to competition very fast as there are hardly any barriers to entry. Also, with globalization happening while there is a threat to your existence, there exists an equal opportunity to add value to the company and work on a global landscape.

The CFO is known to act as a co-pilot to the business and helps the CEO to take the business to the next level. He undertakes multiple roles as part of his profile. Of varied roles that he plays in the company he needs to be a master in balancing two opposing forces – One of compliance and controllership and other of being a risk taker and take decisions to take the company forward.

For a CFO to be an effective business partner and to help drive better business results, he needs to undertake a few steps to kick start the journey. The following are pre-requisites for the same :

  • Getting his house in Order
  • Build systems and Processes / Compliance driven environment
  • Leverage a shared service model
  • Understand business model
  • Alignment with leadership

Getting his house in Order

The finance head would be able to add value to the business only if his own house is in order. You cannot have a scenario where the CFO is trying to add value to the business whereas the basics of finance function at his own backyard are not functioning. He cannot grapple with business decisions if activities like accounting, audit, vendor / employee payments are far from desired levels. These are some basics which he needs to establish so that people (both internal and external to the company) start relying on the finance department. Only when the finance team starts delivering, is when he can start adding value externally to his function and help the business deliver an enhanced performance.

Build systems and Processes / Compliance driven environment

One of the prime focus for the finance team is to ensure that controls are in place, this is across all areas of the business since a weak control would expose the organization to frauds and other weaknesses. The finance head would need to build a culture where adherence to rules and regulations needs to be established. There needs to be a zero tolerance to processes not being adhered to. This would ensure that the culture of the organization would be driven based on the same. There needs to be systems and processes by which the organization is able to understand the risk and to build systems to monitor and reduce the impact of such risks for the normal functioning of the entity.

Leverage a shared service model

Having established a process driven culture is a pre-requisite for a shared services model. This is required for the shared service set up (either internal or external) to start improving on process quality and reduce costs of operation with a centralized approach. A shared services model helps the CFO to establish a framework where most of the routine activities of the finance function are happening on an auto mode and only exceptions needs to be worked upon. This frees the individual to devote a lot more time in other activities and helps in driving business growth and delivery.

Understand business model

To be able to add value to business it is important for the finance head to understand the business model very clearly. He needs to be closer to the ground, understand the manufacturing / operations set up, understand customer needs and see how the organization is geared up for transitioning to the next level. He needs to understand if the current business model is scalable and sustainable. In fact it is only the finance guy who does understand the full cost benefit impact of actions being undertaken and what kind of costs is the company expected to incur to take the company to the next level. If he is closer to the ground he can help take this decisions much earlier on instead of waiting for the same to come to finance as a means of cost approval . He can act in advance and help take the company forward much faster.

Alignment with Leadership

Driving business results is only possible when the finance head has a good and effective working relation with the top leadership. It requires maturity from the leader as well as organizational support and culture for this to happen. There is no point for a finance head to try to drive business is the leadership only requires him to take on traditional roles of an accountant and arranging funds. All the initiatives for the same will thus be lost.

Thus, we can see that finance is in a sound position to take on roles to drive business and to help business grow. It requires some basic steps and some pre-requisites, however they do possess the skill set to ensure that businesses do move forward with their support.


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