How to be a good CFO in 7 steps

As a CFO, you don’t just help your organization survive a crisis; you should be looking for ways to help it respond and thrive. Leading strategic decisions and using your financial planning and analysis processes and experience to push beyond the expected. Challenges or no challenges.

But doing this isn’t always obvious or easy. So, we’ve pulled together several key things you should be doing to get there:

7 financial planning tips for CFOs

1. Create finance first cultures

As the best CFOs know, digital transformation brings significant benefits. One of the biggest is enabling different departments to work closer together and understand their contribution to the business.

Making this happen requires increased cross-functional working and improved communication and understanding. And it's up to you to make sure everyone in the business understands how their contributions and actions impact your bottom line – positively and negatively. Done right, you create a culture that thinks finance first for everything.

2. Bring others on the finance journey

CFOs don’t work in a vacuum. Budgeting and forecasting, done well, is a democratic process. You achieve the goals set by your shareholders and Board and get buy-in from your colleagues at the operational level who execute and deliver the numbers.

In this instance, skill and strategic thinking are beneficial. But it’s also down to you to inform, educate, influence and inspire.

For example, most people in your organization won't understand the effects of delays in planning, delivery, order-signing, or how simple non-compliance can affect cash flow. How can you help?

As CFO, you must become both coach and facilitator. And you do this in 3 key ways:

1. Train non-financial managers in basic best practices to create behaviors that prevent costly errors and support the bottom line.
2. Communicate financial objectives clearly and lead by example when using them.
3. Base incentive systems on financial performance with bonus policies weighted to reflect team cash flow contributions where possible. And whole-company financial performance targets can be made more relevant to everyone.

3. Evolve as the business evolves

Advancing your peoples' impact on your finances is critical for companies as the pressure to drive costs, and operational efficiencies rise. But how?

The key to “how” lies with business partnering and extending its role across the organization as a key driver of strategic alignment.

In recent times this has led to a broadening of the CFO role. A study by CFO Dive found many organizations are now phasing out COO positions and moving this operational responsibility to their CFOs. Meaning you are now key to the evolution of every team, whether that’s finance, procurement, sales or more.

Also, finance is most potent when working with ops and sales teams at this level. So, as CFO, you must be the catalyst for creating greater affiliations between sales and finance, breaking down historical barriers to collaboration.

Sales need to see the CFO and finance team as their partner and destination for solving pricing discounts, remuneration and bonus scheme problems. This means it’s up to you to create this environment and develop the soft skills your team needs to educate non-finance teams.

4. Be flexible

CFOs must not get stuck in their ways. Whether it's a tricky budget, challenging new environments for your team, or the team fails to understand the market pressures and drivers, finance is continuously changing. So, rather than defending arbitrary lines in the sand, you have the power to change and see how flexible you can be.

Of course, you still need to make hard commercial and personal decisions. Yes, you’re a CFO because you know the numbers, but numbers aren’t always what people need from you. You bring the strategic picture to life and understand the links between operational and summary data and how to derive insights from them.

This could be helping others realize the importance of growth over margins or stopping people getting bogged down in percentages rather than seeing the benefits of the overall deal.

5. Use Financial Planning & Analytics tools

Smart CFOs survive challenges by using financial planning and analysis to its full potential. Making decisions faster because the future won't wait for you to get ready.

And while you can't plan for everything, connecting and using all your numbers is the only way to prepare for anything. People need to rely on your FP&A plans. So, your plans give them the tools and insights they need to understand the strengths, flexibility, and opportunities in front of them.

Technology makes this happen, letting you bring your knowledge and experience into your FP&A planning. And as your financial planning solutions mature, your planning, budgeting and forecasting processes will get smarter and faster.

6. Rely on your instincts

You can't always know what's around the corner in business, but your experience and instincts can find better solutions.

That doesn't mean you should not use the numbers or the facts. But instead, you’ll need a portfolio of scenarios or stress tests and sets of actions that you can execute rapidly to meet oncoming threats. It's a must-have for any CFO.

These should become muscle memory for you and your team. Like a fire drill, so everyone knows how to act instinctively when a real fire happens. We don't hear the alarm and then form a committee to work out what to do next – we're hard-wired to respond.

What’s exciting is how technology brings this to life. The right FP&A planning tools perform sophisticated scenario planning with up-to-date data. Allowing you to test the outcomes of your assumptions in near-real-time to assess the best course of action.

7. Look beyond what's in front of you

A common mistake CFOs make is reacting to challenges by instantly looking to cut their workforce. Remember, when market confidence returns, it's your people who will turn things around faster for you. So how does cutting them help this?

Instead, consider where you need strength and depth to boost resilience. One possibility is using data when demand drops in one area to understand if you can reallocate these skilled colleagues to other areas in the business. Helping to retain and develop talent while still driving the needs of the business.

Equally, it pays to understand how technology helps, whether that’s replacing manual tasks with self-driving IT-based processes or building multiple budgeting and forecasting scenarios at the touch of a few buttons.

At Unit4, we use tech innovations for more than work. Sending out regular engagement pulse surveys to get real-time insights into our people's wellbeing, performance, and motivation, which, in turn, leads to better decision-making and improved employee engagement.