Need For A Dynamic CFO In Changing Business Environments - Virtual CFO Services

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Need For A Dynamic CFO In Changing Business
Environments - Virtual CFO Services
How A CFO Can Help?
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What is the first thought that comes to your mind
when you hear the word "Chief Finance Officer"
(CFO). Let me guess accounts, finance, taxation,
numbers, excel, budgets, the guy who doesn't
smile etc? Well if you picked one of the above
choices or were even close to one of the above
then let me tell you what a modern day CFO is
role has evolved into.
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A CFO by definition is the man in charge of the
company's accounts, finances, taxation and
commercials. It is a given that a CFO should have
the competency to smoothly run these departments
with his team. But having only these skills is no
longer an accepted skill set for a good quality
CFO. With the changing business environments,
companies are all the time looking for that
dynamic CFO who is able to cope up with the
uncertainties and the challenges that the role
demands from them. A modern day CFO is expected
to contribute to the business beyond the FA
function.
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What are the qualities expected in a dynamic CFO?
1. Soft-er Skills - Soft skills have become one
of the most important tools for a CFO. CFOs are
spending lesser time in front of excel sheets and
more time in strategy meetings and discussions.
Motivating the team, negotiating well with
vendors, pricing, influencing strategic decisions
are as important as having the TDS paid on or
before 7th! 2. Strategic Mindset- Numbers are
no longer the only deciding factor for strategic
decisions. CFO needs to evaluate the project
beyond the numbers, understand the market, map
the competitors and go beyond ROI and EBIDTA
multiples.
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3. Wearing different hats - CFO should also be
wearing different hats depending on the need of
the business which may go beyond the FA matters.
4. Ownership - CFO should think like the CEO /
promoters. He is anyways a Quasi CEO. He should
always have a sense of ownership towards the
project / company. For a CFO the next natural
progression is to step into the CEO's shoes. Take
for instance, Indira Nooyi who joined PepsiCo in
1994 and worked her way to CFO, a position given
to her in 2001. In her command, Nooyi
restructured the company and led multiple
acquisitions, including Tropicana in 1994,
Gatorade, and a merger with Quaker Oats Company.
It was in 2006 that she became the fifth CEO in
PepsiCo history.
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5. Quality Team - CFO should always try to get
people with the right experience. You want people
that can think beyond just the accounting and can
understand the business as well because they are
going to be in dynamic environment, you want
people to be able to think outside of just debits
and credits. Businesses have become so uncertain
and complex these days with increasing dependence
on external factors. A change in local law of the
land, one accident at the factory, some MNC/
competition entering the market with huge funds,
change in technology are some of the factors for
which no company can foresee.
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The best a company can do is to have a back up
plan in place. In these situations a dynamic CFO
is preferred as compared to a CFO who always
plays by the book. The demand for these CFOs is
high, but qood quality individuals are not in
abundance. Compensation packages for CFOs are
also changing dynamically with 20-30 of
remuneration is linked to the performance of the
company. The CFO of the company is usually
amongst the top 2-3 senior most (and highly paid)
employees of the organisation.
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