Where to go from here – focus on the role of the Controller/CFO
Strategically oriented Controllers/CFOs often ask me how to upgrade the quality of the Finance function, and even more important, it’s perceived value as an integral part of the business. Most of these financial leaders often realize that to enhance their role and value (both for the business and for themselves) they need to go “beyond the numbers.”
The chief financial officer of a medium-sized business should focus on the following:
Communicate what the numbers mean by providing clear reports, indicators and analyses and then ensuring that the rest of the executive team fully understands their meaning. Sometimes it is necessary to go a step further and follow up on ensuring that appropriate action steps are taken. In addition, it is really important that the communication facilitates knowledge and understanding of the areas of the business that the CFO is responsible for, so that you do not operate in a vacuum. One way to ensure open and frank communication from the other executives is to ensure that you share what is happening and the reasons for what you are doing in the finance area;
Provide sound counsel based on the numbers and their implications, taking into account the entire business environment from both a micro and macro perspective. To do this effectively it is critical that the CFO fully understand the various drivers and details of the operation of all areas of the business. Always be well-informed on the economic environment of all your business’s current and potential markets;
Maintain and facilitate cultures of:
Integrity – it is often up to the CFO to not only implement appropriate levels of controls but also to raise a flag when zealous operators get close to legal and moral issues;
Accountability – the operators of the business must be aware of issues that need to be communicated to the CFO or other senior executives so that the finance function and executive decisions are not made in a vacuum; and
Risk management – The natural optimism of entrepreneurs and executives is a critical strength for most businesses but decisions need to be made with an acknowledgment of the down-side possibilities and related strategies to manage the risks.
A recent article submitted by the Canadian Financial Executives Research Foundation to the KPMG Newsletter “Business Advisor” deals with this issue at a high level and from a different perspective.
James Phillipson is a Chartered Accountant and a Principal of Mastermind Solutions Inc. with extensive experience in large and small businesses. He has provided financial counselling to his clients since 1996, often in the role of or as a coach to a Controller or Chief Financial Officer. James has experience in financial roles in a wide variety of businesses and industries.
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