Perhaps you’re at a crossroads in your career and wondering what comes next, or you want to know if your professional background is sufficient to head the financial operations of an organization. No matter your circumstances, becoming a financial officer necessitates possessing a particular set of competencies and taking specific predetermined steps.
If becoming a chief financial officer or a fractional CFO is your ultimate career objective, then you have already started thinking about the measures that need to be taken to accomplish that goal.
Formerly, a chief financial officer’s responsibilities were restricted to maintaining financial records and overseeing the company’s budget. Due to technological advancement, that is no longer the case. The function of being an influential chief financial officer has changed, given how technology has revolutionized the business world through cloud computing, automation, and other means.
Thus, if you want to be on top of your field, you’ll need to put in the effort and hard work and devote a lot of energy to learning your craft and networking with other professionals. Now, to excel as a chief financial officer in today’s environment, let’s take a closer look at the necessary attributes or skills.
Ability to analyze and solve problems
CFOs must have advanced analytic skills to help them drive decision-making, guide their firm’s growth curve, and reduce volatility. They must use business analytics to improve the operational value as they allow companies to grow at an increasing rate.
Every day, a CFO faces tough choices that will have long-term consequences for the organization. To top it all off, rather than simply aiming to strike a “good settlement,” they look for solutions that would benefit both parties involved in the conflict.
For the CFOs to develop a strategy that would lead to the company’s continued success, they need to be familiar with its current state, assets, and relevant data.
Competence in strategic planning and leadership
Preparing financial reports, conducting audits, and ensuring compliance were traditionally considered to be among the significant tasks of a chief financial officer. Financial executives nowadays must be able to “see the forest for the trees” or have a strategic mindset and work toward a larger goal.
Hence, they engage in strategic problem-solving, make important decisions, and establish connections with many stakeholders to accomplish that goal.
If a Chief Financial Officer wants to be successful, they must always maintain an impartial perspective when analyzing an issue and come up with creative solutions. They must show their leadership abilities by being proactive in coming up with and carrying out ideas.
It is not enough for a CFO to merely be a “numbers person” as this is what they are typically expected to do; instead, they need to gain experience working in the field occasionally.
So, they need to rally their teams, steer them ahead, and maintain a steady hand on the reins of financial planning. The most effective CFOs recognize their role as the organization’s overall strategic planner and recognize the importance of adopting a leadership style that is congruent with the business model and objectives of the company.
Ability to evaluate risks
One of the essential tasks of a CFO is to anticipate and control potential risks. When any crisis strikes a company, the chief financial officer, who acts as the company’s first line of defense, is critical in containing and minimizing the fallout.
Most significantly, the CFO is responsible for identifying possible risks and working to mitigate or eliminate those risks. Therefore, the capacity to assess and control risk is a crucial skill for every successful CFO.
In contrast to what most people believe, the chief financial officer of a business misses many risky areas inside the company’s operational structure. Some sectors, including information technology, security, people, and compliance concerns, must be considered in addition to the financial sphere.
Capable of making sound business decisions
Learning and comprehending the function that finance plays in the overall operations of a company’s performance is the ultimate indicator of a person’s level of business acumen in the financial industry. For a CFO, this means understanding where they fit in the value chain.
A capable chief financial officer will have the business skills to spearhead enterprise-wide initiatives. To shape the company’s trajectory into the future, they collaborate closely with executive-level management and the board of directors. They take the role of pioneers in bringing about transformation.
Lastly, learning to think strategically is crucial to becoming a top-notch CFO. Asking questions, performing analysis, and developing a strategy are the most effective ways to improve your capacity for strategic thinking.
Acquire expertise in technical areas
Adaptability to new technologies is an essential talent beyond the typical purview of a chief financial officer. Since the advent of technological developments, conventional wisdom has been rendered obsolete, and a successful CFO must adopt novel approaches. They can quicken the pace of an organization’s advancement and invigorate its culture by emphasizing innovation management.
It is indispensable to have a solid understanding of the most recent technological possibilities, particularly given that we are currently living in a digital era in which problems can be solved by technical investigation. CFOs can invest in systems or software that can help them scale and analyze data.
Proficient in communication and values collaboration
Historically, CFOs have relied on data from historical operations to inform present-day strategy. In this modern day, CFOs are trained to put data from the past, the present, and the future into perspective to generate insightful conclusions and make decisions.
The next step? CFOs now have the ability, thanks to advancements in innovative technology, to anticipate trends and plan concerning the policies and procedures that govern their companies’ spending.
Besides that, the CFO and the finance teams engage with many stakeholders who are not directly linked with finance to uncover pertinent data and extract meaning from it. Communication is crucial for CFOs as their function has expanded beyond the financial sector.
To become a good communicator, a Chief Financial Officer must possess several skills. It includes the ability to keep meetings, whether in person or virtually, engaging and participatory, translating their financial expertise into language that others can comprehend, and understanding the goals of individual departments to conduct relevant talks.
A CFO’s workload is usually rather heavy, so the ability to consistently perform under stress is an essential trait for them to have. It is also vital to provide current and accurate information, and they should be willing to take the actions required to achieve beneficial outcomes. A successful CFO is adaptable and flexible but has the initiative to get things moving.
You know the seven essential skills required to be an excellent CFO. Despite these caveats, the fact remains that the CFO’s duties are continually expanding and changing. The evolving nature of technology and business processes makes it hard to pin down what makes a good chief financial officer. One thing is sure, and that is that you cannot afford to let your guard down.