Top Gun hit theaters in 1986. Between the time of its publication and its sequel 36 years later, not much has changed in the checklist a CEO needs from their financial wingman or wingwoman. As CEO, I often speak to others in the same position from different generations. I find the CEO’s demands of his CFO remarkably consistent.
Didi Gurfinkel
If you ask a CEO what they want from a CFO, they will ask for reliable forecasting, unbiased rigorous analysis, a balanced focus between cost models and development, teamwork, and someone who really understands the business.
While these basics haven’t changed, it’s true that they’ve gotten a lot harder. But here are five ways CFOs can fulfill the wish list of today’s CEOs.
1. Understand business strategy and optimize forecasting
The conditions typically observed over decades have intensified over the years. This makes forecasts more complicated. Businesses are struggling to forecast quarterly sales and dealing with continued shipping delays and falls in demand or investment. Therefore, to meet the top priorities of companies, CFOs should lean on their financial planning and analysis (FP&A) work like never before. FP&A should add value by looking outward and what is happening with customers, the broader industry, the competitive landscape, financial performance rates and economic forecasts, and integrate this information into short-term strategy and long-term strategy.
2. Prioritize cash flow planning
Obviously every CEO needs to know something about liquidity — cash can’t be the latter. We rely on our CFO and his team to efficiently model cash flow to determine how many weeks of liquidity a company has in stressed business scenarios. This includes understanding a company’s sales cycle, cash outflows, and the key levers that play with them.
3. Provide better and cleaner data
Being data-driven is essential for every CEO and for our investors. Bad data can drown businesses. Unfortunately, I’ve seen some companies say they don’t have data quality issues.
Many people spend long hours in a morale black hole breaking time to prepare and consolidate data. In a recent survey of CFOs, we found that when it comes to manual data processing, 41% of the work is done manually (10 hours per week that qualified finance professionals spend on manual work). This prevents the CFO from becoming the effective business partner we need. In fact, 81% of CFOs admit they suffer from more intense daily manual work than any other position in the C-suite. At worst, the CFO or his team can provide the wrong story, which is frightening.
Conversely, when asked what they would do if given that time, CFOs in our survey responded by listing what CEOs expect from their CFOs. We found that 52% of CFOs would spend more time on business partnerships if they were free, 44% on analytics, 36% on new ways of financial reporting, 33% on better communication, and 32% on better work-life balance . All of this is critical to the success of the business and ensures that the CFO’s role as a driving force for the business remains visible and effective.
4. Challenging legacy technologies
Fintech has historically been undervalued. Highlighting the technical gaps in FP&A teams, 47% of those involved in consolidated annual planning and budgeting use digital technologies. At the time of the first Top Gun fanfare, of course, the Excel was launched. Like Tom Cruise, it hasn’t aged much, and Excel is used by more than 70% of CFOs in US companies for core tasks like budgeting. But the flip side of Excel’s success story is that version control issues, collaboration, and time-consuming manual processes weigh heavily on finance teams nearly forty years later. Overall, it is important that the entire ecosystem of technology is coordinated for the benefit of the entire organization. This includes mapping all system data, eliminating individual Excel pilot errors as much as possible and ensuring that business unit data communicates with each other.
5. Communicate clearly and know your audience
With so much uncertainty, the CEO prioritizes agile communication with all key stakeholders. The CFO is an important support in this. For example, quick drill downs into numbers are important for management on a given day. Some CFOs have established a cross-functional SWAT team in their organization to understand and identify key inputs that are critical to scenario planning. Elsewhere, CFOs spend significant time speaking to investors, boards, regulators, and other stakeholders, which is critical to providing a true picture of a company during tough times.
It’s important for CFOs to be in good shape to optimize their organization, acquire new skills, provide timely information for decision-making, and optimize technology. Earning this right will keep CEOs and their companies on the right foot to survive and thrive in these adverse conditions.
Didi Gurfinkel is CEO and co-founder of DataRail.
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