The CFO role has certainly evolved with the advance of accounting software. Where before the CFO was simply the top number cruncher, overseeing finances and bill paying along with an accounting clerk or two, a modern CFO has evolved to strategist and analyst. Now, the CFO is a trusted advisor and business expert, along with being a storyteller who can take the numbers from the finance team and craft the narrative of where the company has been and where it should go next.
Modern CFOs are leaders, thinkers, and doers. They’re equally as likely to recommend new accounting software as they are to prepare the quarterly budget, address shareholders, or answer questions from managers about their accounting practices. Knowing how to navigate accounting software not only enables them to recommend the best software solutions, but also empowers them with the decisions they need for effective leadership.
Let’s look at three facets of the modern CFO and the role they play within the typical manufacturing company.
Establishing, Communicating, and Monitoring KPIs
CFOs work with company managers to develop and monitor key performance indicators (KPIs), which measure the success of specific goals. These may be related to production, cost savings, marketing, operations, or other core functions of the company.
Establishing KPIs means working with team leaders across multiple disciplines to determine not only what can be measured, but what value will be obtained from the measurement itself. Just because you can measure an aspect of production does not mean that you should; you can measure the time spent at work of any employee, but time spent at the office does not necessarily equal employee productivity.
Getting metrics right takes time and wisdom. Knowing what to measure, how to measure it, and how often to report on progress towards goals should be steered by a seasoned company executive who understands the business, its needs, and the industry’s sales cycles.
Once established, conduct KPI reporting on a routine basis. Determining when to report and analyze KPIs is an essential function of the CFO. Some metrics should be reported frequently, others less so. A wise CFO knows when and how to communicate metrics.
Risk Management and Internal Controls
Another critical area the modern CFO guides is risk management and internal controls. Risk management begins by understanding the company’s financial data, sales history, and projects. By knowing the data and understanding the implications of the data, the CFO can then manage around potential marketplace risks and rewards.
CFOs must also establish and enforce internal controls. The term “internal control” refers to a set of policies and procedures that guide company employees on how they handle various financial situations. This set of rules or guidelines is vital to keeping the accounting department running smoothly. Internal controls must be established, documented, taught, and enforced.
A third area for the modern CFO to be fluent is cyber security. This is especially important for smaller companies that outsource their IT functions, leaving the CFO’s accounting software expertise to fill the gap.
The average ransomware attack costs companies $5 million, on average, to correct. One out of every five files in a company is at risk for security breaches. With so much at risk, companies face enormous challenges in securing their data from criminals.
The CFO has a tough job helping to shore up defenses against cybercrime, beginning with training at the employee level and conducting security audits. Choice of accounting software, ERP system, and other software solutions can also help offer security protection.
Cybersecurity is an area that no one would have predicted would fall into the CFO role. Now that it does, it’s an important task that must be addressed to keep company files, data, and finances secure.
Support Your Modern CFO With ASI
It’s clear to see that the business software you choose has a deep impact on the successful support of your CFO and ultimately your company. If your accounting software could use an update to match your modern CFO role, Accounting Systems, Inc. has what you need. Contact us today and let us help your business get on the road to modern financial success.
Still looking for more information? Download this free Acumatica ebook for additional insights into the role of the modern CFO: Top Technology Challenges of the Modern CFO.