CFOs Make The Numbers Talk And Tell A Story

It is often said that the CFO is no longer a numbers person.  This is not really correct.  A CFO will always be a numbers person.  It is just that he has moved from a role of merely preparing them to that of understanding, analysing and interpreting them.  It is the CFO who makes the
numbers talk and tell a story.  By a process of dicing and slicing these, he gets an insight into the performance of the company and, thereby, the health of the business.  It is this insight that has enabled the CFO to see early warning signals and take corrective measures where  required. This along with his extensive knowledge of the legal and regulatory framework has
enabled the CFO to play an invaluable role in partnering the CEO on matters relating to business strategy, both formulation and implementation. He is the key advisor not only to the CEO but also to the Board.

In the present times, the demand and challenges of the environment have increased manifold.  It is the CFO who is deeply involved in interaction with various players, both internal and external. The frequent interactions with various external agencies, such as, shareholders,
analysts, bankers, rating agencies, etc., allow the CFO to understand how the world perceives the company, and what people are happy about and what they are unhappy about.  He is the person who is always advising these agencies on the performance of the company.  He is the
one who explains and, at times, defends the business decisions of the company. He has to perform a tight balancing act, which is to be fully transparent and yet not divulge competitive and confidential information. With this, he becomes the external face of the company. This results
in the CFO gaining valuable inputs which he can then share with the CEO.

"A CFO has to perform a tight balancing act, which is to be fully transparent and yet not divulge competitive and confidential information"

The CFOs involvement in strategy formulation as part of the core team essential as he, with the financial information available to him, can identify the businesses that are doing well and
those which require management and financial support or even those which are beyond redemption and need to be shut down altogether.

In the current times, with so much emphasis on governance, reporting and compliance, it is only the CFO, with his vast understanding of the regulatory environment and the ever increasing
demands of the regulators, who can effectively advise the CEO and the Board on what effective measures need to be taken.  It is only the CFO who can ensure timely and proper compliance.

Financial management is another key ingredient.  The CFO has an important role in ensuring that financial discipline is maintained.  His input on allocation of resources ensures that these resources are not frittered away by some hare-brained and flamboyant schemes.

It is imperative for all managements to understand and acknowledge the reality that the CFO can provide much greater input than just taking care of the financials and audit.  An increasing
number of corporates have understood and appreciated this and have benefitted from this.  For those who have still not acknowledged will surely fall in line, sooner rather than later.