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Enhancing Finance Leadership to Propel Company Growth

by Scott Schimberg
February 27, 2020

As a middle-market company matures, finance leadership becomes more central to its operations and new opportunities emerge for finance leaders to play strategic roles in driving the organization forward.

The most effective CFOs at growing companies transform the finance function beyond its rear-facing reporting approach into an influential source of innovation that leverages financial and operational data to enable better decision-making by the company's leaders and its sales, marketing, product development and operations functions.

Reporting financial data quickly and accurately remains critical, but transformational CFOs also deploy analytics capabilities and leverage operational data to provide deeper insights that help the company grow more rapidly.

These capabilities are especially important in the face of tremendous market volatility that accentuates the traditional challenges of generating market growth and success.

According to our CFO Evolution research, more than 90 percent of surveyed CFOs say their ability to influence the organization's direction is critical to their companies' survival in the face of today's market complexity and volatility. One of the challenges for CFOs is an ever-accelerating pace of marketplace change, including fiercer competition from companies inside and beyond traditional industry boundaries.

Together, these forces dictate that the finance function must play a more strategic role to help the company grow, thrive and reach the leaders' ultimate goals.

For instance, the CFO will need to review the company's business processes and its incentive plans to see if they're appropriate for its current size and plans. Revenue and bill-payment procedures built for a start-up can overwhelm a company expanding beyond the middle market, so basic processes that were performed manually should be automated with software better suited for a larger organization.

In addition, bringing in external investors or taking on bank debt means the company will face stricter requirements for providing financial and operational performance data, as well as complying with debt covenants. These, in turn, will require stronger capabilities to provide this data on a consistent, timely schedule.

Broader Skills

Higher responsibilities mean CFOs must have broader skills that extend beyond the nuts and bolts of technical accounting. Long-term planning, for instance, will become more important as the company grows and its horizons extend beyond the next quarter (or the hopes of landing a big contract to buy a few months' worth of funding). The CFO will work with other leaders, the company board and other stakeholders (such as investors or lenders) to identify emerging opportunities and the company's goals.

These may include going public or selling the company to a strategic investor. In either case, the CFO will help the company create strong financial, operational and risk management frameworks so it can survive as a public company or maximize the value it receives in a sale.

High Demand

The value that a transformational CFO can bring to a growing company means leaders with the right skills and experience are in high demand. So, where do you start?

A good approach is exploring your network for candidates who can meet the position's requirements while also being a good cultural fit for your company. External investors and lenders, for instance, may have worked with strong CFO candidates at other companies.

It may take time and effort, but bringing in the right CFO can be a key strategic move to propel the company to the next level of growth and success.

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