CFO - A Catalyst In Taking The Company To Higher Trajectory

Maximizing Long-Term Corporate Growth And Shareholder Value

As technology has taken over accounting, a CFO is certainly no more a store keeper. Today, CFOs have to play a strategic role in taking the company to higher trajectory  by being a catalyst in optimising costs, thereby increasing the bottom line and suggesting newer revenue streams. For example, a company having its own tool room for making tools for captive consumption should think in terms of exploring possibilities of selling the tools outside. Very intelligent use of multifarious treasury products offered by banks and financial institutions provides opportunities for additional income.

A company having wide network of franchisees may use its resources for developing softwares for billing, analytics, inventory management and accounting for the business in order to ensure uniformity. This affords an opportunity to gradually spread the wings in other directions due to the synergy effect. A CFO has to focus on healthy finance management, which will multiply the value for the stakeholders. A very good balance sheet will attract direct investments which would enable the company to launch new projects. This also provides liquidity to the stocks in the market, which in turn leads to better shareholder value.

By proactively watching competition the CFO should get deep insight into their operations and would ultimately be able to explore possibilities for mergers and acquisitions which will enable the company to capture additional market share. CFO is the Brand Ambassador whose effective interaction with the outside world viz. the investors, bankers, the analyst community
and other stakeholders will go a long way in enhancing the prestige of the organisation in general and the product brands in particular.

Challenges Of The Indian Economy: Strategy- Setting, Financial Planning, And Risk Management

During adverse economic conditions, the CFO should play a very vital role in transforming the general gloom to a positive opportunity. This can be done only if he wears a different hat and think out of the box rather than focussing only on financial controls. One such example could be Investment in Brand. Since the market is not growing, the focus should be on capturing the market share from the competitors, which would require additional outlay on advertisement and marketing strategies. This expenditure should be viewed as an investment for the future, for when the economy bounces back; it is our brand which will be recalled in the memory of customers. The CFO should see an opportunity in adversity.

"A CFO is the Brand Ambassador whose effective interaction with the outside world will go a long way in enhancing the prestige of the organisation in general and the product brands in particular"

From a margin led strategy, the CFO should influence the management to go for an ROI  trategy, where the emphasis is on larger amount of profit rather than larger profit per unit. These are only illustrative. The strategies that a CFO recommends should take into account the inherent risks involved and he should put in place a risk management strategy, in consultation with the senior management team.