Over the past 10 years, more change has occurred than over the previous 50.
Technological innovation has transformed business functions, operating models, roles, responsibilities, and nearly every element of the enterprise marketplace.
“Different industries have seen transition happen at different paces, but 20 years ago, the CFO was the senior accountant at the company … but now, the majority of companies need their CFO to be a strategic leader and trusted adviser, a crucial player in shaping the direction of the organization,” Erik Sallee, CFO at XiFin, told PYMNTS for the series “A Day In The Life of a CFO.”
This shift is driven by the increasing complexity of the business environment, advancements in technology, and the need for companies to be more agile and responsive to market changes.
“You still need to be a technical expert in accounting and finance, but you also need to lead large organizations and explain finance to nonfinancial professionals in a way that makes sense,” Sallee explained.
He emphasized the growing importance of transforming financial data into actionable insights that can guide the strategic direction of the business. This involves breaking down complex financial information into key performance indicators (KPIs) that align with operational metrics.
“Without a finance function that can do that, the business is likely to fail,” Sallee said. “The hardest part is not coming up with exciting ideas but financing and executing them effectively.”
While still important, the historical, fundamental tasks of the finance function around accounting and compliance are now table stakes for the role.
Increasingly, as CFOs are tasked with understanding the business and providing guidance, Sallee said that by focusing on specific metrics and building consensus around the need to prioritize certain initiatives, the finance function can help the executive team make difficult decisions about resource allocation. This strategic focus enables companies to move forward with clarity and cohesion.
“A strong finance leader and finance function can help the business understand what it takes to plan your work, and then work your plan,” Sallee said.
And in today’s volatile business environment, risk management is a critical aspect of the CFO’s role. Sallee highlighted three key risks that he is monitoring: cybersecurity, market fluctuations, and talent acquisition and retention.
“Everyone has been dealing with cybersecurity for a long time,” he said, noting that, “There’s no way around it other than blocking and tackling, doing the right thing every day keeping all your systems up to date, making sure you’re working with good vendors, and investing in it. It’s a cost-avoidance type of investment, but it’s one you have to understand and you can’t short shrift it.”
Market fluctuations, particularly interest rates, also pose significant risks. “We work with our financial partners to insulate ourselves from macro trends and ensure that our business performs on its own merits,” Sallee said.
The most significant risk, however, is related to people. “Finding and retaining high-quality talent has never been more important or difficult,” he said. “Investing in our employees through company culture, integrity and leadership is crucial for long-term success.”
The rise of digital technologies has profoundly impacted the finance function. Sallee discussed how XiFin leverages big data and artificial intelligence (AI) to optimize business processes and drive better decision-making. He also noted the importance of understanding the technological landscape and integrating new solutions when it makes sense for the business and its customers.
“The CFO needs to be an integrated part of the overall operations to ensure that technological advancements are leveraged effectively,” Sallee said.
Effective communication is another critical skill for modern CFOs, who are frequently turned to as a source of financial truth within the business. Sallee emphasized the importance of translating financial performance into operational terms that are easily understood by nonfinancial professionals.
“Modern data processing capabilities make it easier to tie operational metrics to financial performance, turning them into leading indicators rather than lagging ones,” he explained.
The role of the CFO has undeniably evolved, and those finance functions that stay ahead of the transformation have embraced a blend of technical expertise, strategic thinking, leadership, and effective communication. As Sallee illustrated, modern CFOs must navigate complex risks, leverage digital solutions, build consensus, and invest in their teams to drive long-term success.
As the business landscape continues to change, the CFO’s ability to adapt and lead will remain crucial in shaping the future of their organizations, he explained.
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