As a CFO, you might be feeling overwhelmed lately. If volatile business conditions weren't enough, your role has evolved away from reporting financial statements and towards functioning as a critical business growth driver.
Given this change, you might be wondering if your financial skills are quickly becoming obsolete?
The good news is, you can keep pace with these changes by developing the following skills.
CFO skill one: Data translation
Embracing the challenges that come with the CFO role today begins with mastering the skill of data translation.
Modern CFOs must leverage data and analytics to fuel strategic decision-making. They need to delve into their data, invest in tools that help them make sense of it, and excel in the art of financial storytelling.
Martinez places special emphasis on that last skill:
"Always remember your role as a storyteller and consider your audience," he advises. "Who are they, what are their objectives and how can your story help them? Be concise, clear and deliver meaningful insights."
Kirk Kappelhoff, Director of Strategic Finance at Drivetrain, echoes this view. "Never state a number without telling a story, and never tell a story without stating a number. The key to telling that story comes down to understanding your data, anticipating questions, and keeping it simple."
He lists an example of keeping explanations simple in a complex environment.
"There is always complexity in an industry, but 90% of the story can be simplified. For example, in the SaaS industry, we may simplify it into three items, New ARR, Expansion ARR, and Churn ARR," he says. "By explaining each of these individually, a CFO will capture the attention of their non-financial audience while also demonstrating that their plan is well thought out."
Here are a few steps that ensure you're comfortable analyzing data and communicating insights:
- Assume ownership - Collaborate with your technical teams to understand data structures and infrastructure choices. You'll identify improvements that could give your analyses more context.
- Proactively model - Run business forecasts proactively to understand potential challenges deeply, identify opportunities, and make better decisions.
- Invest - Adopt tools that offer real-time, accurate, and actionable insights supported by visual dashboards that bring numbers to life.
- Learn - The language of your audience, that is. Craft easy-to-understand, compelling narratives that tie back to business objectives. Use LLMs like ChatGPT to translate complex jargon into everyday language.
Bottom line: Modern CFOs must distribute actionable insights by embracing data analysis and building easily understood stories to deliver a positive impact.
CFO skill two: Collaboration and communication
Modern CFOs cannot exist in a silo. Instead, you must build relationships with people in business units to understand growth drivers and influence stakeholders.
You cannot tell a good story without understanding the background behind the data. Intra-business relationships give you context, something that is critical when building a compelling growth picture.
Here are a few examples of critical relationships every modern CFO must build:
- Technological - CFOs must understand how their data arrives and in what formats. Can the firm support unstructured data storage? Can your tools mine such data for insights? These questions will help you improve your data analysis workflows.
- Sales - What are your customers demanding, and how is their behavior changing? Are your competitors offering an improved product? Sales will help you understand external threats to revenue, helping you model growth scenarios accurately.
- Customer success/service (CS) - Who are your best customers, and how successful are your upsell/cross-sell workflows? CS teams will give you the context behind current revenue data.
- Accounts receivable and payable (AR and AP) - AR and AP efficiency indicates the strength of your customer and supplier relationships. The better these relationships, the more you can rely on them during turbulent times.
Bottom line: Numbers are great, but modern CFOs must go beyond them and understand their context. By doing this, CFOs can deliver insights better aligned with business reality.
CFO skill three: Visionary leadership
Aside from developing their interpersonal skills, modern CFOs must future-proof finance by structuring their departments correctly. To execute this goal, you must rely on a combination of technology and people with the right skills.
Technology might threaten people working in finance, though. Kappelhoff offers a novel way of securing buy-in from team members. "Whenever I got a new toy as a child it would become the thing I brought with me everywhere, showed everyone, and played with all the time," he says.
"If members of the finance department have a shiny new finance toy to play with, it’s going to seem less like a task that needs to be done and more like a task that "I" get to do. If the team feels that an investment is being made in their role, they in turn will want to invest more into the firm, especially with tools that make non-value-add tasks more efficient or allow employees to get to the analysis quicker.”
Martinez believes CFOs must take the lead and encourage their team to continuously upskill. "(CFOs must) encourage continuous learning and development within the finance department," he says. "There are amazing courses on Advanced ChatGPT for Finance in platforms like Maven, for example, or about the new hot topic, Python in Excel in LinkedIn Learning."
Kappelhoff emphasizes creating a data-driven mindset on a company level and offers a practical workflow for this.
"The CFO identifies five to 10 key operating metrics that, if improved, would create a better organization, explains what the metric represents, the value is for the organization, and the goal value of that metric," he says. "Every month, the CFO emails the progress report of these metrics to key stakeholders and employees, giving credit where due."
This process aligns employees with organizational objectives while keeping them engaged and involved with the company's data.
Bottom line: CFOs must show their teams the way forward, getting them to trust technology and data while aligning them with company goals.
CFO skill four: Risk management
CFOs have always viewed risk through numbers like cash flow shortfalls and working capital projections. You must broaden your horizon.
For instance, Kappelhoff lists a risk that most CFOs don't readily consider:
"The single largest and most complex challenge of the CFO is gaining and retaining talent," he says. "The CFO battles the competing virtues of reducing their people costs and compensating people enough to keep them happy."
"There is no “right” answer here, and the best way to handle this is by having frequent check-ins with team members, and making them feel valued in non-measurable ways."
Here are a few examples of risks modern CFOs deal with and how their impact is broader than numbers on an accounting statement:
- Compliance - Non-compliance goes beyond regulatory fines. It negatively impacts the brand, leading to lower revenues.
- Ethics - Companies are aggressively chasing growth, and this might lead RevOps and Sales to aggressive revenue recognition. CFOs must communicate this risk from an ethics PoV and its impact on customer trust.
- M&A - M&A targets always bring risk, and CFOs must rely on data to decipher them.
- Currency risk - While currency risk may affect cash flow and projections, its impact goes further, impacting how well products compete globally, as well as strategic decisions like market expansion, pricing, and sourcing.
Bottom line: CFOs must move beyond financial statements and weigh the qualitative impact of their role in a world where uncertainty is increasing.
CFO skill five: Agility
If the modern business environment is constantly shifting, CFOs must adapt to it by cultivating agility in themselves and their departments. Screening new hires for the right skills is one part of building agility, as Martinez and Kappelhoff previously explained.
However, CFOs must go further and fully embrace technology, given its ability to enable faster decision-making and save time in operational finance. Martinez emphasizes the importance of grounding technological choices in practical use cases.
"Demonstrate real-world examples and case studies of how technology has augmented the roles of finance professionals," he advises. "This will make them (technology choices) more efficient and strategic."
Successful modern CFOs must have the emotional intelligence to balance technological adoption with fears of it replacing people's jobs. Kappelhoff's point about adaptability is pertinent in this regard.
Bottom line: CFOs must build agility in the finance department, adopt technology that assists this goal, and have the emotional maturity to assuage fears of human obsolescence.
How will you fare?
These demands might seem too much to ask of a CFO, but the good news is they're all an extension of your innate ability to make sense of numbers and data.
By marrying technology with human ability, you can future-proof your finance department and reduce business risks for your company by extension.