CFOs Should Impact More Than Just The Books: A Conversation with SCOPE’s CEO on her take of ‘The Modern CFO’

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Did you know that only 10% of companies recognize their Chief Financial Officer (CFO) as a finance only function? 

If only 10% of businesses have a CFO that solely focuses on finance, what are the other 90% of CFOs up to? 

We decided to talk with our SHE-E-O, and Founder, Denise, about her take on what it means to be a ‘Modern CFO.’

Denise has been steering companies as an industry CFO for almost a decade. Working across a range of industries she believes that a strategic, systems focused, approach is the catalyst that drives profitability, innovation, and sustainability. 

What is your take on ‘The Modern CFO’?

In business today, we see CFOs that have increased responsibility in risk management, information technology, human resources, and facilities management. In a previous era,many CFOs had a siloed focus in accounting.

As a Modern CFO you are expected to have the chops to run a company financially, strategically, and operationally. 

Sitting in the seat of CFO you are in a unique position to bridge the gap between finance and strategy as you work to execute the CEO or company’s vision. 

What makes a great Chief Financial Officer vs. a good one?

The ability to combine analytics with instinct.

Utilizing data and experience to analyze risk. The Modern CFO must curate a risk strategy that balances protection of the organization with calculated risks that will propel you forward.

Without well-rounded operational experience it is difficult for a CFO to provide that level of insight and strategy to a company.Yet, 43% of CEOs state that they expect this to be a part of their CFOs skillset when they are recruiting. 

Having this level of experience in the C-Suite, you can see the butterfly effect of decision making. With that you can begin to acutely move the needle in the direction you want to go. 

If you do this correctly, you will successfully execute the CEOsvision while increasing cash flow and profit.

If I have learned anything in the past 10 years, it is this: Get comfortable with the uncomfortable, surround yourself with experts, trust your gut, build authentic relationships, and learn from your mistakes

Do you have any advice for CFOs looking to apply a ‘Modern CFO’ approach? 

Data is pivotal. What data are you using? What are your metrics telling you? 

When working with clients at SCOPE, we apply an ‘XP+A’ model. 

Many people are familiar with Financial Planning + Analysis(FP+A) which is planning, forecasting, budgeting, and analytical activities that support a company’s major business decisions and overall financial health. 

Extended Planning + Analysis (XP+A) is the process of linking strategic, financial, and operational plans for greater visibility into not only individual plans and forecasts but all plans across an organization to be more aligned and agile. 

When you switch your focus from just finance to the broad company-wide vision, it allows CFOs to work from a sole source of truth and support nimble and economic practices within business decision making positioning you as a Strategic C-Suite Executive vs. A promoted accountant. 

How do CFOs move from an FP+A to an XP+A model? 

If you are working in legacy offline systems, your first step should always be to get buy in from your team and organization. 

Change is inevitable but tolerance for change alongside strong change management will allow you to fundamentally shift the company from one model to the next. 

A Gartner study found that by 2024, 70% of new FP+A projects will shift to XP+A. 

One of the biggest examples we see of this at SCOPE is clients coming on board that have been using excel as their business data and driver of decisions. While excel is a phenomenal tool – for other things – it should be the way you plan and model your business. We refer to this as a ‘Legacy System.’

A ‘Legacy System’ is outdated tech. Technology that was designed and developed decades ago is for businesses that were run decades ago, they do not suit our business or the market needs today. 

Legacy tech 

– It is not easy to maintain, manage, or upgrade 

– Does not meet current compliance standards 

– Usually not as secure as new tech developed in the digital age 

When it comes to XP+A tech here are the questions we tend to ask

1. Is the XP+A tool easy to use or will it require a heavy lift from in-house teams to make it work and get it set up? 

2. Is the XP+A software scalable? Does it have multi-location, multi-department, and an expansive capability? 

3. What software integration capabilities does the XP+A tool have? 

4. Does the XP+A tool work for your organization’s set up, needs, and long-term future? 

5. Will data be near-instant to develop forecast and analysis that allow for quick decision making as the company needs change? 

XP+A takes a time commitment and a tech investment and its core. If your company or team are not ready for this shift, it is not going to be impossible to achieve XP+A but it is a significantly bigger mountain to climb.

What do you think is the next thing for the ‘Modern CFO’ to master?

Be a storyteller. 

The one thing that I see most CFOs have in common is that they are all naturally numbers-oriented people. Being numbers-oriented is no longer enough, you must be able to explain their story. 

Do you clearly articulate the finer points of reporting, understand how all the parts of the organization are affected by changemaking, and explain the meaning behind the numbers? If not, start here. 

Once you have perfected your financial narrative it is time to use data visualization. Graphs, charts, tables, etc. capture some of the ‘non-number’ brains in the room which can help deliver a message quickly and clearly. 

What is the biggest challenge you see for the ‘Modern CFO’ in the next few years? 

The biggest challenge is turning numbers into something meaningful. 

One of the primary responsibilities of a CFO is to providereports, information, and conversations that have accountability, integrity, and flexibility to enable executive and management staff to manage the business more effectively. 

With many CFOs managing down their resources, it is important to listen to those around you and strategically implement a plan that is continuous, ever-evolving, and risk-balanced. 

Do you have anything else to add for current and aspiring CFOs out there? 

Harmonize your three key planning processes via cross-functional integration. Doing so will create a strategic, holistic, and economic view of the company. 

Create Key Performance Indicators (KPIs) and measure them. Do not create them and then toss them aside. Measure and tweak to make sure you drive the company in the direction you want to go. 

Scenario Management is a concept that I work to keep at the forefront of my work which means managing in real-time, multidimensionally, and collaboratively

I am licensed in money, people, and systems, and I apply my organizational approach in that order. We need to manage the money to ensure that we can create a healthy and happy workplace for our people that innovate, manage, and maintain our systems. 

Interested in learning more about XP+A? Contact SCOPE today for a free consultation. 

Opinions, analysis, and other commentary are not endorsed by any third party and should not be taken as legal or tax advice.

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