Some study finance, business, economics, or management, and work their way up the ladder. Some transition into the role after spending a chunk of their careers in a different (though related) discipline. And others still find themselves thrust into it completely by accident.
There’s no one right way to become a CFO. But while there are several different career pathways you can take, those who excel at the job all share similar qualities and skills.
So what makes a great CFO?
Over the past 68 episodes of our podcast, The CFO Playbook, we’ve asked this question to several of our guests. These are the five characteristics that come up in their answers, time and time again.
As a CFO, you have a mind-bogglingly broad range of responsibilities — from expense management to highly complex areas like audit and tax.
The learning curve is steep. But, more importantly, some of your staff may have a much better grasp of certain issues than you can reasonably be expected to have given your workload.
For this reason, says Symphony.com’s Ben Chrnelich, it’s crucial to trust your team and defer to them on technical matters. “The people I’ve worked with…” he says, “they’re the functional experts.” His job as CFO, he believes, isn’t to know every last detail, but to find a way to “connect those functional experts with each other and also to the broader goal we’re trying to achieve.”
Similarly, says Corelight’s Russ Keefe, “I’m not the one that sits there and does expense processing, [so] this isn’t my decision to make.”
But delegation isn’t just a practical necessity, it’s also about empowering your team so they can learn, mature, and grow.
“I want [colleagues] to be able to make decisions on their own that are best for the company,” continues Keefe. “You have to empower that.” And, sometimes, this means taking a back seat even if staff “make mistakes, or do things that I wouldn’t have done that way.”
Northern Data AG’s Christopher Yoshida wholeheartedly agrees: “I’m probably 1/3 leader and 2/3 cheerleader… The decision can rest on my shoulders. If it’s wrong, I’ll take the responsibility… But far more important, my role is cheering on my team so they get to do exceptional things.”
A word that often comes up on our podcast is ‘partnership’.
As CFO, one of your primary aims is to get as much value as possible out of the resources you allocate. And you’re much more likely to do this effectively if you work in partnership with other departments, rather than be the person who comes in with a calculator and lays down arbitrary rules.
Russ Keefe uses budgeting as an example.
“If you create a system where everyone knows they have to ask for twice as much because you’re going to cut it in half…,” he says, it becomes a self-defeating exercise. “You get into these weird negotiations with everyone inflating their budget.”
Similarly, observes Ben Chrnelich, your team could be spending days putting together a report, blissfully unaware the people it’s intended for aren’t looking at it, because it’s not relevant to them.
“Incorporating input from different departments on what they need and why,” continues Keefe, ‘…can lead to a more effective budget…connected deeply into the business.
“Does this match up with our pricing models? Does our engineering team feel like they have the resources to deliver? Show them that you can be fair, and come to a compromise.”
Most importantly, showing others within your organisation that you want to be their partner builds trust. And this will make your relationships much more constructive. As 1Password’s Jeannie De Guzman observes, “you don’t get buy-in… unless you’re helping [people] out. Then they’ll help you out too.”
Because an organisation’s financials can get very technical, being able to break things down is a crucial skill.
“When you’re talking about budgets,” says Jeannie De Guzman, “a lot of people’s brains shut off. They don’t understand why, say, the thing you paid for is being amortised over a year. It can get confusing. The best finance leaders can sit there and explain it in layman’s terms.”
Taking the time to simplify complex concepts and make them easy to understand has two compelling benefits.
First, it helps strengthen your working relationships.
“When I’m talking to somebody on, say, the development team… and they’re talking about a really technical concept in a way I can understand, I’m grateful,” continues De Guzman. So when somebody wants something explained, she makes time to do it.
Second, and more important, the numbers are just the medium. A fundamental part of a CFO’s job is to be able to extract the message from that medium so decision-makers can use it to map out a way forward.
“We’re storytellers,” says Christopher Yoshida. “The numbers tell a story [and] you know the story better than anyone else because you’re closest to the numbers.”
Or, in Ben Chrnelich’s more colourful words: “You don’t walk up to someone and say, ‘Hi, seven plus four’. You talk about what’s happening in the world, what’s going on in a business and then use numbers to measure that.”
At the same time, you also need to know your audience.
The best communicators meet people at their level. So, while some groups will appreciate you keeping things basic, you also need to be mindful not to come across like you’re talking down to groups — like investors, for instance — who may be more knowledgeable and sophisticated.
“You definitely have to think differently with different groups,” says De Guzman,
“One of the things that could be really helpful is asking ‘How much do you know about this?’ Or, if I feel like the person may not have much detail, I might say ‘Hey, I’m really going to simplify this a lot, but if it’s too simple, let me know.’ I’ve found this to be very effective.”
The letters in CFO might stand for ‘Chief Financial Officer’. But, as important as it is to have a good grasp of your organisations’ numbers, there’s a lot more to the role.
The modern CFO isn’t just responsible for historical finance. Increasingly, they’re a key strategic advisor. And while “eventually, the numbers tell you everything,” says Ben Chrnelich, “they don’t tell you everything if you don’t spend time understanding how they’re built, how they’re generated, and what themes are coming out of them.”
For this reason, Russ Keefe strongly recommends taking on roles outside of finance, if you have the opportunity to do so.
“You get a much deeper appreciation for the business beyond the ones and zeros,” he says. “It’s a powerful experience… you understand the emotional aspect, the psychological aspect… you really get a great feel for the business.”
Jeannie De Guzman agrees. “When I think about what helped me get to where I am today, it was when I saw an opportunity to do something that was outside of my role. It gave me a much more well-rounded experience.”
Even if you don’t have an opportunity to step out of your comfort zone, Cult Wines’ Gemma Castle says it’s critical to immerse yourself in the business as much as you can. This will inform your decision-making by giving you a better understanding of “the demands and requirements of other departments.”
CFOs who shut themselves off and just do the books, argues Ben Chrnelich, end up “at the mercy of either the markets or decisions that are made away from you.
“You really have to know: Why do customers buy our products? Where do we have deficiencies? How are our investments enabling our products to be better positioned?”
The CFO’s evolution from financial gatekeeper to strategic advisor also means finance automation has an ever more important part to play.
To give decision-makers accurate, timely advice, CFOs and their teams need access to real-time data and the bandwidth to analyse it thoroughly. And neither is possible if you’re reliant on spreadsheets and other cumbersome manual processes that clutter up your to-do list.
“Technology,” says Ben Chrnelich, enables “the CFO and the finance function to have an impact that previously you were not able to [have] because the volume of work was so manual.”
“There are ways you can use technology to speed every process up,” continues Bam Boom Cloud’s Kirstine Archer. “And the more we do that, the less we’re reliant on human fallibility.”
Archer believes the reason finance teams are still so reliant on Excel and other manual processes is “symptomatic of the fact that finance people don’t challenge the status quo enough. We need to be bigger advocates of the fact that this doesn’t work for us.”
More to the point, because the finance function is the custodian of an organisation’s most sensitive data, it’s incumbent on the CFO to take ownership of the digital transformation process.
“The CFO has to be really involved and really engaged in terms of the technology being used in the enterprise,” says Illumio’s Anup Singh. “It’s everything from the day-to-day automation of our business processes. How can we automate our quote-to-cash process? The purchasing process, the hiring process inside of your company.”
If this sounds like a lot of effort, it’s because it is. But the long-term payoff, says Melio’s Lena Loiberg, is worth the short-term pain.
“Automation,” she concludes, “is probably the key for efficiency and for having more time to deal with strategy and the real interesting analytics of the business.
“The more you can automate the menial tasks and use technology to integrate different tools so that information is at your fingertips in real time, the more you can free up bandwidth to think strategically about the business and put your efforts towards initiatives that help the company grow.”
Changes are being brought in to harmonise HMRC’s penalties, as currently, there is no consistency across the tax system. For example, filing your annual self-assessment return one day late results in an instant £100 fine. At the same time, there are many instances where the late filing of a VAT return for the first time doesn’t result in any charges.