Global consulting firm, McKinsey categorizes the role of a CFO into four types: the finance expert, the generalist, the performance leader, the growth champion. However, I believe, in today's day and age, it is very difficult to restrict a CFO to any one of these categories. Today, a CFO is required to be a jack of all these trades and, in fact, a master of them as well!
As a CFO, one has to be a finance whiz, strategic advisor, risk mitigator and even be involved in business development. To be able to set apart one role from another or to expect the new-age CFO to not look into the other domain is difficult and perhaps a wrong exercise. With businesses taking on bigger tasks and processes becoming ever more complex, a CFO cannot be relegated to just one domain or role. The times demand we step beyond the traditional finance guy role and into a multi-tasker adept at strategy and decision-making.
With that in mind, I feel the new-age CFO must don many hats:
1. Executioner: As a CFO, you need to establish systems, processes and checks at every level where revenue and expenses are involved. You need to identify the right platforms and tools that will help you monitor growth, achieve transparency and support data mining.
2. Ready-reckoner: You need to have in-depth knowledge and understanding of the business, its financial status, and regulatory and tax requirements. Further, if your business is active globally, then you need to know the regulatory and tax systems of the countries you are present in. This knowledge will help you comply with all the government protocols and resolve disputes that may arise.
3. Controller: You need to own the cash! For a business to survive and grow, money is paramount. You should have the full view of the cashflow. Especially if you are part of a start-up, you need to be on top of every finance decision. Every spend needs to be critically assessed and discussed as at this stage you do not have the liberty to loosen the purse strings.
4. Planner: It is essential to forecast, plan and analyse the company's growth chart at every stage. More so in a start-up because then you need to see which KPIs to consider and track. You would have to identify, record, measure and compare metrics to improve short-term and long-term value to keep the company on track to the desired performance level.
5. Risk analyser: Often, in start-ups, entrepreneurs prefer to have someone who helps them view and mitigate risks rather than have a full-fledged CFO onboard. Reason being, as the company is at a very nascent stage, they need someone who can work on risk management and compliance issues than just focus on the financials. For instance, agreement vetting will take centre stage.
6. Communicator: You are the only person fully aware of the company's past performance, present situation and expected growth. As a result, it will be your responsibility to share this knowledge with internal stakeholders and investors. Using this financial insight, you would have to discuss your business direction, immediate and future targets with all the C-level executives.
7. Advisor: Often in companies the CEO is the visionary everyone looks up to. What most people forget is that those visions can't be turned into a reality without the CFO's nod. At such a juncture, a CFO's role is not about saying "No" but to say "Let's do it this way". You would have to light the path leading to the vision.
Frankly, adaptability is the key to a CFO's role. With the changing times, our roles too have taken on bigger dimensions, and therefore, the more adaptable we are, the better we are!