The Role of a CFO and What a CFO Needs to Excel in a Crisis
A crisis comes in all forms. Some are company-specific, while others are industry-specific. They can also be specific to geographical location or global. Regardless of the type of crisis, the Chief Financial Officer or CFO plays an important role, if not the most crucial role during these times.
The Role of a CFO
The CFO’s role has evolved over the past several decades. Just being the financial steward of the company isn’t enough. The CFO is the only executive with financial and strategic expertise. Therefore, the CFO must appear in the forefront and navigate the company through all obstacles.
Below are some of the areas where the CFO must excel.
Adapt to a Virtual Environment
In today’s climate, the CFO must collaborate with the HR team to cultivate leadership and growth. When adapting to virtual work environments, the CFO must communicate change effectively as well as develop talent and successors. Furthermore, the CFO works with fellow executives and other relevant parties to address their needs and push past barriers to find success.
Plan for the Good & Bad Times
Long-term defensive strategies don’t always score points or generate revenues, but cash is king. Planning appropriately during turbulent times is paramount to ensure your businesses’ survival. Whether it’s tough decisions regarding headcount, reduction to capital expenditure, deleveraging, or negotiating with vendors during difficult times. The CFO remains prudent to ensure that the company is in the best position for current and future success.
Overcommunicate to Maintain Relationships
Strong teamwork is required to run a successful business. But this becomes of even greater importance during a crisis. The CFO must communicate with not just executive leadership effectively, but the entire organization. Customers, vendors, banks, investors, and employees require greater attention during times of crisis. During a crisis, CFOs take the lead in a variety of ways. For instance, you may work with:
- Customers to address potential product/service interruptions and maintain your position as a supplier.
- Vendors to extend payment terms and assurance of smooth flow throughout the supply chain process.
- HR to ensure employee safety, confidence, and retention.
- Banks/board to provide them with timely and relevant updates that help instill confidence that you’re in a position for future success.
Evaluate Your Business Model and Strategy
The CFO plays a more strategic role than ever before, becoming a business partner and advisor. A CFO must discuss the current strategy with the executive team to determine relevancy, ensure liquidity protection, and position the company for growth after the crisis. The CFO must analyze the market and key indicators to ensure that the executive team adapts their planning without bias leading to potential change and opportunity. Updated forecasts with new revenues, volumes, pricing, cost of goods, and other expenses will help the decision-makers better execute business sustainability.
Some companies may have a solid performing CFO, while others may not be in the position to afford a full-time CFO. In either situation, a CFO consultant can add tremendous value by bringing a neutral attitude and unbiased opinions that otherwise may be overlooked even by the best CFOs. CFOs of today are in a position to drive and transform their organization through financial expertise, strategic thinking, and operational knowledge. Whether full-time, consultant, or a combination thereof, it is a good idea that for your company to have the expertise that a CFO bring
Preparing Your CFO for Success
The CFO’s responsibility during a crisis is no small feat. Having systems and access to responsive solutions will help improve the finance team’s performance and the overall company. By collaborating with Bagchi Group, you can access the tools and resources needed to come through the crisis stronger and more equipped for the next stage.
Schedule a consultation to learn how our business and finance services can help your CFO navigate potential issues and opportunities.
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