The 2008 financial crisis proved to be a turning point in catapulting the CFO’s role to the forefront of the C-suite. Companies across the globe became more dependent on CFOs to brace themselves in the event of another such crisis keeping the bottom line and financial statements healthy. As discussed in previous articles, CFO’s today are expected to lead and lend a helping hand in strategic management of the business on the whole. As such, the relationship between the CFO and the CFO becomes a primary aspect in the company’s success.
The professional working relationship between the CEO and the Chief Financial Officer is ever-evolving and forms the foundation of the company and its culture. These two leaders must forge a strong relationship based on trust, partnership and a similar vision for the organisation. Together they define the organisational, strategic, operational, and financial blueprints for the company. A strong communication line between the leaders can bring in transparency, financial success and overall company growth. Here we take a look at the core aspects a CFO must communicate to the CEO for unbridled success.
Financial Health and Budget Management
This goes without saying but many a times, over the course of time, leaders sometimes tend to work in silos without keeping each other updated. As a primary responsibility of the CFO, the CEO must always be in the know about the company’s financial health. Advanced financial skills and the ability to analyse critical data is important for long-term stability. Communicating analytical insights with the CEO is crucial so that he/she can keep the finances in mind when taking decisions for the company. This will further strengthen the business and its operations.
Being a strategic partner of the company, the CFO is expected to have a clear vision about the business. It is important for the finance leader to communicate budget restraints, surpluses or any other issues to the CEO which builds a strong CFO-CEO relationship. Insights on budget management will help develop a well-rounded view and projection of the business which will be something that the CEO can base his future plans for the company on.
Evolving Business Landscapes and Unpredictable Economies
In today’s world, technological advancements are a constant and a successful CFO must be able to keep up with these changes and utilise the ones that make running the company smoother. He/she should be able to effectively analyse the financial position of the company and implement business solutions taking cues from the evolving landscapes. And of course, these and any fresh ideas that affect the business functioning need to be communicated to the CEO.
Companies must continuously evolve and adapt to keep up with the changing economies. A strong financial foundation will always give the company a competitive advantage. Coming up with creative solutions and flexible alternatives suitable for an unpredictable market is the sign of an innovative CFO. Backing them up with data and statistics is necessary as numbers do most of the talking.
Prepping For Board Meetings
Reporting the business’s financial performance effectively is a core responsibility of the CFO. Coordinate these financial reports with the CEO to ensure that both are on the same page and to avoid confusions during important board meetings. Preparing these reports well in advance helps ensure that all the financial elements are accounted for and are in order to make quick decisions. A detailed report on financial developments can come in handy to ensure that any questions that come up during meetings can be handled with ease between the two leaders.
Today’s CFO’s act as right-hand partners to CEO’s by giving inputs on strategy and financial execution and clearly, one cannot function efficiently without the other. Effective communication and transparency is the key to building a good working relationship and leading the company to success. On that note, we leave you with a few rules successful CFO’s believe in:
- The CEO usually delivers the good news, and the CFO the bad news.
- The CFO reports to the CEO, unless under very special circumstances.
- CFO’s are expected to lead with integrity and clarity of thought.
- Not all rifts are unnecessary, some can be productive too. Work towards a solution.