CFO’s Big Picture – Can you Leverage Available Data and Technology?

How the CFO role evolved and is more dependent on information technology

The CFO’s office has changed considerably over the years.  While the title still stands for “Chief Financial Officer”, many of the duties of a typical modern day CFO are not financial in nature. These range from legal and compliance, to risk management, to overseeing the IT and HR functions and other responsibilities.

I remember in years past that CFOs were almost always accountants by training, many with a CPA designation.  Nowadays, we see more general business professionals take on the CFO office, occasionally with little or no direct work experience in accounting and finance.

While it’s true that today’s CFO is more of a policy maker, strategy planner or legal expert than an accountant, the CFO is still ultimately responsible for all accounting, finance and reporting activities in the organization.  The CFO is a signer on external financial reporting on statements provided to lenders and shareholders and in public companies is personally responsible (and liable, along with the CEO) for accuracy and completeness of reported data and disclosures to the SEC.

An area of increasing responsibility for CFOs is forecasting their companies’ future financial health.  They need to answer (along with the CEO) to the board of directors on issues such as compliance and reporting deficiencies, internal and external audit matters, legal action, and whether or not the company is on target with its revenue and expense forecasts, as well as other business related issues.  They also are responsible for all internal and external reporting and all required disclosures.

Traditionally, much of the CFO’s ability to make or influence important decisions was based on limited available data from the organization’s accounting system and other data sources not directly linked and integrated into the finance and accounting areas.  Decisions were based on prior experience, intuition, and to a certain extent on speculation.

It is not surprising to realize that many, so called, “business mistakes” were honestly based at the time on available information and limited ability to track important data, such as leading indicators, actual key performance indicators, financial ratios, etc., all available today thanks to an incredible array of software business tools and a solid infrastructure.

These software tools are available not only to Fortune 1000 or large and complex organizations, but also to small and medium size companies.  The feature set found in these applications, while not always completely adequate for the largest organizations, can certainly be implemented in smaller organizations in many industries, empowering CFOs and their finance and accounting teams to gain insight into their company’s performance and help the executive team in making decisions that will steer the company in the right and expected direction.

Particularly important to CFOs is the ability to perform a complete and accurate forecast of the financial health and performance of their organization, relying on intelligent data gathered in the process and on automated software controls and processes that make such accurate forecasts possible.

In a future blog post I will elaborate on how a small to medium size company CFO can harness the power of this technology in their daily work, and provide greater value to the board of directors and shareholders.

As seen on Centage’s Budgeting and Forecasting Experts Blog

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