CFOs need to create sustainable growth
The CFOs will have to deliver on a wide range of fronts like data analytics and digital transformation; supply chain management; and revenue management
The role of chief financial officer (CFO) is evolving and outbreak of Covid-19 has only accelerated the shift from a focus on pure cost control to one that is supporting the wider growth objective.
While cost control remains an important element, the balance between driving effective cost management while also enhancing the focus on business growth and operations management is increasingly within the ambit of what the CFO’s team needs to understand and be on top of.
The CFOs will have to deliver on a wide range of fronts like data analytics and digital transformation; supply chain management; and revenue management, said Raef Lawson, vice president-research and policy and professor-in-residence for Institute of Management Accountants (IMA)
While CFOs have traditionally focused on cost control/management in order to help their organisations grow profitability, they now need to focus on the other element such as driving revenues. End-to-end revenue management is an increasing important part of the CFO’s mandate.
Lawson , who leads IMA’s global thought leadership efforts and oversees IMA’s student and academic relations programmes, said: “Today’s CFO is expected to add value well beyond the traditional roles of cost management, controls and acting as the conscience of the organisation. In the Middle East, the role of the CFO is already being redefined, with the next generation of CFOs in the region expected to come from a finance business partner or controller background. CFOs are expected to work in collaboration, by serving as the integration hub for key business processes, as a catalyst for change including business transformation, and as a consultant or trusted business advisor in helping to create sustainable growth.”
A new report by IMA and The Association of Chartered Certified Accountants, ‘The CFO of the Future’ report show that the global pandemic is changing the role of the CFO and Covid-19 is accelerating the shifting of the CFO role. In the Middle East, the role of the CFO is already being redefined, with the next generation of CFOs in the region expected to come from a finance business partner or controller background.
“CFOs are now being looked to for regulatory and risk management and are increasingly also the catalysts for business change, business resilience, and technology advancement. The pandemic, while devastating companies and sectors, has also created new business opportunities, and organisations need to be even more agile to help them identity new opportunities. The CFO and his team are at the forefront of this, helping their organisations course-correct, re-evaluate and implement business strategy in order to pursue business continuity and drive profitable growth,” said Lawson.
In the Middle East, six in 10 CFOs are either already focused predominantly on stakeholder and investor management rather than safeguarding and reporting or are planning and expecting for this transition to occur. More than three quarters of the region’s CFOs believe that they currently have, or will soon have, a key role in business strategy formulation, validation and execution with accountability and responsibility towards respective performance.
Contrary to the rest of the world, Middle East CFOs have lower expectations for becoming CEOs. Just over half anticipate that this may be the case in the next five years, while more than a quarter stated that it is unlikely to occur. Around the world, at least 20 per cent of study respondents stated that they are currently progressing into the role of CEO.
“Global events have set the world into an unexpected state of transition in which the role of CFOs is proving to be more important than ever before. As the results of the study demonstrate, the role of the CFO in the region is changing into creating value and contributing to business growth on a more holistic scale, as opposed to focusing on the financial aspect alone. The need for determining new sources of value is growing tremendously amongst entities of all sizes, across all sectors,” said Hanadi Khalife, senior director of MEA and India operations at IMA.
“Our CFOs of today are strategic and forward-looking, and no longer limited by their organisation’s financial agenda,” said Clive Webb, ACCA head of business management. “They have broad agendas and are contributing to their organisations in ways that we identified back in 2012, even during this global pandemic. Our CFOs are more well-rounded than ever and will continue to enhance their skillsets as many take on more responsibility and possibly become CEOs in the future.”
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