Improved visibility: how can CFOs gain a better understanding of the business?

Editorial note: This article is a derivative of the Payhawk x Raconteur report, The CFO agenda: Unlocking growth without compromise

No longer seen as "chief number-cruncher", the modern CFO has emerged as a key leadership figure, working alongside CEOs to define and execute the business’s strategic goals. But this shift means CFOs must develop a holistic understanding of the business and a solid grasp of its future outlook.

For CFOs, getting access to accurate data to support understanding, planning, and accurate forecasting is massively important. According to Raconteur and Payhawk’s research, the leading priority for CFOs today is improving forecasting (78%), followed by improving metrics and insights.

George Kutnerian, CEO of Wellpointe Inc., a provider of residential assisted living services, says:

Scenario planning is key as a growth company. You want to know what things will look like when they don’t go to plan. You want to understand where your sensitivities lie. What are the real drivers in your model?

But the shift from reactive to proactive is not without its challenges. Building visibility of the business can be difficult, particularly as companies expand to different regions or countries, create new products and grow their workforce.

The research revealed that 63% of CFOs and 70% of CIOs deemed centralising control and visibility as “extremely challenging.” Furthermore, 96% of respondents said gaining visibility of the rest of the business to understand how other departments operate was a ‘very significant’ challenge.

Risk management is a key priority for CFOs, particularly in volatile economic conditions, as is optimising capital allocation to support strategic initiatives. But it becomes much harder for CFOs to understand financial risks, much less predict them, working in silo rather than collaboratively. For CFOs, the transition to gaining greater visibility will require continuous learning, strong communication skills, broader operational skills and a deep understanding of the importance of technology and data.

Gerard Keenan, CFO at pharmacy app Charac, said:

Most CFOs don’t invest time to understand the business dynamics and customer mix. It is extremely important that CFOs understand the operations so that they can use financial tools to help mitigate risks, particularly cash flow.”

CFOs will need to work closely with fellow C-suite executives and other departments outside of the finance team such as sales and marketing, to understand the needs of the business as well as the differing challenges and opportunities. Effective collaboration leads to greater alignment on spending, budgets, pace of change and technology needs – all essential ingredients for long-term success.

Tom Carless, CFO at investor relations business Edison Group, says:

CFOs should have regular dialogue with different stakeholder groups that allows them to verify the information they are receiving. This group should include other business leaders in their company, staff at the coal face, clients, suppliers and competitors.”

The pace of technological advancements shows no signs of slowing, with the likes of AI, machine learning and data analysis disrupting businesses across all industries. In this new age, digital transformation will be at the heart of increasing CFO visibility and influence.

As the saying goes ‘data is the new oil’ and having access to company-wide data offers valuable insights and a deeper understanding of the bigger picture behind the numbers.

But for many CFOs, it can be difficult to gain the insights needed to make better-informed decisions without the right data. After all, the output is only as good as the input and a lack of data integrity risks blinding CFOs rather than empowering them. In fact, 85% of respondents cited visibility as the biggest challenge facing CFOs when managing multiple tools, followed by transparency, and data quality and consistency (73%). This is a huge red flag for businesses that need to be able to capitalise quickly on opportunities both today and in the future.

Tim Wright, head of operations at finance software provider Xledger UK, points out that legacy systems can pose obstacles.

We are seeing a lack of what we believe to be necessary requirements like access to real-time data and the ability to accurately forecast. But the modern finance function seems to be at odds with itself. Aware of the misgivings of outdated systems but concerned about how to sustain business as usual and an increase in backlogs

“Finding the right time to take the leap and commit to change seems to be a common concern across the profession,” he continues.

According to Wright, for finance departments to realise the true operational efficiencies that will provide a holistic view of an organisation’s finances and enable them to predict future trends, teams must first build trust in the transformation process.

Building that trust starts with empowering new forecasting and business planning capabilities across the finance function. It is here that CFOs deepen their confidence in the digital transformation journey and champion finance to become a true strategic enabler for future business growth.

For Carless, accurate and timely management information systems and dashboards that incorporate both financial and non-financial information will be key to broadening the CFO influence and helping them position the business for the future.

Carless explains:

The CFO must ensure that there is a common understanding and interpretation of this information within the business and in a fast-paced environment, the information should be real time.

It is also important that different departments are empowered to adopt new technologies that are fully integrated and perfectly aligned across the business.

Kutnerian adds:

If you’re going to hold teams accountable or reset expectations from a cultural standpoint, make sure you give them the right tools to deliver on the changes that have been asked.

In today’s world, change is a given. To lead successful businesses and prepare for tomorrow, CFOs will ultimately need to position themselves at the forefront of innovation built on investment in people, processes and technology.

Looking for further insight into the impact (and benefits) of complete financial visibility? And tips on how to achieve it? Get the full report now.