From behind the scenes to frontline: The evolving role of the CFO

CFOs have numerous responsibilities to handle, and now there is an additional demand for them to take on a more prominent role in areas traditionally managed by the sales or human resources leadership teams. As technology and digital transformations have become integral to all businesses, CFOs are no longer relegated to the background. Instead, they have taken a front seat, becoming a strategic partner that adds value to their organizations while still managing the traditional financial responsibilities. 

While traditional CFO tasks like financial reporting and compliance remain critical, the CFO's role has become more frontline and strategic. CFOs now need to be able to identify new growth opportunities and manage risk while also balancing the organization's financial interests. As businesses become more complex, CFOs are now taking a more active role in decision-making and developing strategies for growth. They need to understand how technology is transforming the business landscape and leverage digital solutions to drive efficiencies and improve financial performance.

New responsibilities and collaborations

According to the PAC report, most PSOs anticipate an increase in revenue (77%), with even more expecting an improvement in their cash flow (85%) and operating profitability (80%). Business leaders are preparing for a more uncertain period by ensuring they have sufficient cash flow for investments in talent and portfolios to drive growth. This will put pressure on the office of the CFO to monitor progress on these measures and ensure that their growth ambitions do not compromise the right controls and platforms.

For a while now, CFOs have played a crucial part in shaping and implementing the M&A and overall business plan of professional service firms. According to the PAC report, over 60% of companies state that their CFOs have a strong or leading position in contract and deal execution, as well as sales and customer interaction. More than half (52%) of the firms also see their CFOs playing a significant role in recruitment and talent acquisition.

Sixty-four percent of IT services firms consider their CFO a critical player in the execution of contracts and deals. This emphasizes the need for commercial innovation to differentiate from competitors by offering unique deal structures or terms. Some vendors are now considering shifting from time-and-materials contracts to outcome-based engagements, where payment is determined by the quality and prompt delivery of work, so CFOs must weigh the potential risks and rewards to guarantee the success of these deals.

The report also states that high staff attrition has posed more of a problem for the professional services sector than any other industry in recent years, driven by the talent shortage in many areas. Poor utilization and high turnover will affect the bottom line, so CFOs should be looking to collaborate with their peers to develop solutions.

In the highly competitive talent marketplace, offering the highest salary to keep employees from leaving is not enough. According to the PAC report, 81% of business leaders believe that attractive roles and career paths draw staff away, while 76% recognize the need to improve employee engagement and wellness. Successful professional services firms are differentiating and reinforcing their talent management strategy by prioritizing the softer aspects of employee management. These impact the bottom line, which presents another need for CFOs to work alongside HR to develop recruitment, retention, and compensation strategies.