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What is the first thought that comes to your mind when you hear the word \"Chief Finance Officer\" (CFO). Let me guess; accounts, finance, taxation, numbers, excel, budgets, the guy who doesn\'t smile etc? Well if you picked one of the above choices or were even close to one of the above then let me tell you what a modern day CFO is role has evolved into.
Need For A Dynamic CFO In Changing Business Environments - Virtual CFO Services
How A CFO Can Help?
What is the first thought that comes to your mind when you hear the word "Chief Finance Officer" (CFO). Let me guess; accounts, finance, taxation, numbers, excel, budgets, the guy who doesn\'t smile etc? Well if you picked one of the above choices or were even close to one of the above then let me tell you what a modern day CFO is role has evolved into.
A CFO by definition is the man in charge of the company\'s accounts, finances, taxation and commercials. It is a given that a CFO should have the competency to smoothly run these departments with his team. But having only these skills is no longer an accepted skill set for a good quality CFO. With the changing business environments, companies are all the time looking for that dynamic CFO who is able to cope up with the uncertainties and the challenges that the role demands from them. A modern day CFO is expected to contribute to the business beyond the F&A function.
1. Soft-er Skills - Soft skills have become one of the most important tools for a CFO. CFOs are spending lesser time in front of excel sheets and more time in strategy meetings and discussions. Motivating the team, negotiating well with vendors, pricing, influencing strategic decisions are as important as having the TDS paid on or before 7th!
2. Strategic Mindset- Numbers are no longer the only deciding factor for strategic decisions. CFO needs to evaluate the project beyond the numbers, understand the market, map the competitors and go beyond ROI and EBIDTA multiples.
3. Wearing different hats - CFO should also be wearing different hats depending on the need of the business which may go beyond the F&A matters.
4. Ownership - CFO should think like the CEO / promoters. He is anyways a Quasi CEO. He should always have a sense of ownership towards the project / company. For a CFO the next natural progression is to step into the CEO\'s shoes. Take for instance, IndiraNooyi who joined PepsiCo in 1994 and worked her way to CFO, a position given to her in 2001. In her command, Nooyi restructured the company and led multiple acquisitions, including Tropicana in 1994, Gatorade, and a merger with Quaker Oats Company. It was in 2006 that she became the fifth CEO in PepsiCo history.
5. Quality Team - CFO should always try to get people with the right experience. You want people that can think beyond just the accounting and can understand the business as well because they are going to be in dynamic environment, you want people to be able to think outside of just debits and credits. Businesses have become so uncertain and complex these days with increasing dependence on external factors. A change in local law of the land, one accident at the factory, some MNC/ competition entering the market with huge funds, change in technology are some of the factors for which no company can foresee.
The best a company can do is to have a back up plan in place. In these situations a dynamic CFO is preferred as compared to a CFO who always plays by the book. The demand for these CFOs is high, but qood quality individuals are not in abundance. Compensation packages for CFOs are also changing dynamically with 20-30% of remuneration is linked to the performance of the company. The CFO of the company is usually amongst the top 2-3 senior most (and highly paid) employees of the organisation.
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