Future of Finance

The Evolving Skill Sets Of Finance Leadership

The role of finance leadership in organisations have undergone historic transformation over the course of the last decade or two. The economic crisis of the early 2000’s snowballed and demanded that CFO’s and finance heads of businesses, small and large alike, step up and evolve along with the business as a whole. Today, the traditionally risk-averse CFO does so much more than just crunch numbers or manage the ABC’s of accounting.

Considering the merging of world markets and the truly global scale of economy, new-age CFOs need to redefine their role by updating their skill sets. Gone are the days when a tirade of degrees behind one’s name could assert their importance within the organisation. Nowadays, companies are all about CFOs with relevant work experience backed by sound skill sets who can rise up to the challenges. Listed below are some of the most valuable skill sets and characteristics that make a company’s finance leadership truly successful.

Utilise data to successfully drive business forward

Crunching data has now become fairly straightforward with the available technology, but what is important is how a finance head utilises this data to make pivotal decisions and play a bigger role within the organisation while also being accountable. It is important to not only pay attention to the number-driven performance indicators but also to the non-financial ones since the former has been shown to be rather inconclusive. You could consider using performance metrics such as the Performance Pyramid or the Balanced Scorecard, to name a few, that have been proven to show an accurate sense of performance indication.

The difference between a good CFO and great one is the ability to analyse data and use it to chart out the financial future of the business keep its best interests in mind. A leader with a strategic mindset can help the business identify the main business drivers it needs to focus on to ensure growth and sustainability. As one of the primary decision makers of an organisation, building a strong rapport with your organisation’s CXOs becomes a necessity to manage any challenging financial decisions that come your way. A new-age CFO champions smart investment, asks the right questions and turns down activities that aren’t high up on the priority list so that the few most important ones to the business can thrive. The deciding factor here is strategic value.

Have strong integrity and a moral compass

Being in a finance leadership position is a balancing act, more so for a group CFO. On one hand you need to keep the best interests of the individual businesses in mind along with the interests of the larger business conglomerate. To the outside world, as a CFO, you are the financial gatekeeper of your organisation.

Integrity is more about communication skills and a natural sense of leadership because often times loyalty towards the organisation and the “code of conduct” as mandated by accounting bodies may contradict. With rampant corruption and news about the falls of mighty corporate giants, a number of well-known professional accounting bodies have included the dimension of ethics and morality to their accounting and finance courses.

Stay updated with the latest technology

In today’s day and age, staying up to date with technological advancements is imperative to the survival of anything finance. FinTech, a healthy marriage between finance and technology, is not just another buzzword but a burgeoning necessity in this technologically dependant world. Finance leadership should move with the times and keep themselves updated about technology that can reposition their organisation in the industry while reducing cost, manual labour and also be environmentally conscious. It is probably time to move on from large old Excel spreadsheets and instead embrace cloud technology.

Be prepared to take some risk

Risk-averse finance leaders may soon become obsolete. Today, the world is all about taking calculated risks and revelling in exciting outcomes. Think of a scenario where you are presented with two options on a platter. On the left is a known devil and on the right an unknown angel. Which one would you choose? Would you go for the devil knowing that it will add no value to your company but instead bog you down, simply because you are aware of its nook and corner or will you choose the angel that you will first need to get a feeler of. As the leader of tomorrow, it is important to keep an open mind and consider the options open to your organisation before choosing as it can have larger implications on the entire business.

While it is important to be prepared to take the plunge, it is also crucial to identify the types of risk, the sources and how to be prepared to deal with the implications it can have on your organisation. There are a variety of risk management tools available to finance personnel in the market to help with these kinds of scenarios.

Explore new avenues of investments and financing

As the finance leader of your company, you will be required to think of new investment and financing avenues that can give your organisation returns commensurate to your expectations. It is time CFO’s, finance leaders and treasury heads think beyond conventional banking products and instead explore newer products like crowdfunding, invoice discounting, P2P lending, etc. while making themselves aware of the risks, security and returns associated with these options.

With so many investment products available in the market that are essentially the same “low-return high-risk” products with lower liquidity, how can you as a CFO be certain that the chosen product is the best fit for your company? This is where KredX Early can help. It is a corporate treasury management solution that can help manage an organisation’s treasury surplus with risk-free returns as high as ~16% since the surplus is invested in the invoices of your own vendors payable against your company.

The most successful of finance leaders today don multiple roles while they actively champion strategy along with an appetite for risk at favourable times. As entire markets and the economy move towards a global approach, it is only an evolving mindset armed with the necessary skills that can prepare a CFO for the challenges ahead.