A CFO that impacts a business will have great communication skills and is comfortable communicating financial data to board members and investors. Today, CFOs are responsible for measuring and monitoring performance. Along with managing performance, CFOs must manage risk and create value for stakeholders, investors, and business owners.
Here are 4 key points a CFO uses to add value to a business using a CFO strategy:
1.) A CFO needs to be aware of risk.
Risk Management is a key component in analyzing growth forecast. To perform the role effectively, CFOs should look beyond prevention and acknowledge strategic risks, communicate risks in strategy planning discussions, and focus building a teamwith advanced analytical skills. Knowing the weaknesses and short comings of internal departments within a company, helps CFOs to look at the level of risk that demands creativity and limits mistakes to drive the best performance solutions.
2.) CFOs need to be supportive of innovation and new business models.
Working together with entrepreneurs and startup companies helps to drive innovation. CFOs have a key role in building successful relationships with new businesses, reorganizations, and potential business partners. CFOs need to align incentives for Investors and increase value for business owners.
3.) Providing creativity by delivering effective aggressive strategies.
Value strategies should provide competitive dynamics, business needs, emerging technologies, and an evolving regulatory environment. For example, a CFO can find ways to generate capital for new business opportunities for long-term growth. XYZ company purchases in new plant or equipment to generate additional revenues and income. A way to generate capital for investments is to use funds from a company’s operations. Also, earnings by the company belong to the owners or investors and can be given back in a dividend or can be reinvested back into the company (reinvesting back into the company is a better option).
4.) Be an inspiring leader with ethics and strong purpose.
Incorporating purpose in a business and establishing ethical guidelines motivates staff and employees to meet new challenges. CFOs are the frontrunners and leaders for ethical business practices. They build and provide purpose in any business by leading through example, and by providing outstanding performance measurements.
If you need a CFO strategy, contact Total Accounting for more information at (727) 449-1835 or email us at CFO@mytotalaccounting.com.