Crisis and the Seasoned CFO

Carmen Diaz
Carmen Diaz

In a time of crisis, the importance of a seasoned CFO is crucial to a small business’ ability to survive and thrive.  This has never been more critical than during the COVID-19 pandemic which has significantly affected our personal and professional lives in a short period of time.  It is important to mention that the current pandemic has not been nor will it be the only crisis that businesses will face.  Among the challenges that seasoned CFOs have faced and will continue to face are new technology and innovation, geopolitical uncertainties, regulatory changes, enhanced governance requirements, recessions, pandemics, and many more.  Yet it is important to remember that a seasoned CFO with vast experience in handling a myriad of crises is able to fully embrace change and become a valued strategic partner.  Further, she/he is well-positioned to face existing challenges presented by the pandemic and other crises that will emerge in the future. 

Diverse Abilities

A seasoned CFO must master the following:  

  • The ability to look at issues from a micro and macro perspective, being able to use data-driven information (micro) and pair it with the overall growth strategy of the company (macro).
  • The ability to communicate effectively, ensuring that information is clear and transmitted to all stakeholders of the company including employees, banks, regulators, investors, accountants, auditors, and the public.
  • The ability to manage costs and investment objectives, presenting options that reflect the risks/return tradeoff and solutions that promote confidence and transparency.

Considering that the CFO is the individual with the best financial insight into a company, it is his/her responsibility to translate financial data into a story that captivates its audience. 

Thus, seasoned CFOs must:

  1. Possess the business – be active in driving strategy and transformation in the organization.
  2. Possess the solution – optimize the company’s performance and facilitate improvement. 
  3. Possess the story – be an effective communicator to retain stakeholders’ support and form a cohesive team.

Solidifying the CFO/CEO Partnership

A seasoned CFO understands the importance of having a solid and trustworthy relationship with the CEO, as it’s the most important relationship in an organization. This relationship must be based on trust and mutual respect and be honest enough to acknowledge differences of opinions and accept positive criticism.   The two must work together to develop a cohesive vision for the future of the company, understand the potential challenges and opportunities the company will face, and have the ability to work together to proactively conquer them. 

The pandemic has forced many organizations to profoundly change their day-to-day operations.  Stay at home orders and social distancing have created a new normal of remote working.  A seasoned CFO has been exposed to remote working as globalization and migration have been transforming the workplace for many years before the pandemic.  Having the experience to successfully manage and unite dispersed teams with diverse viewpoints and cultures is nothing new for a seasoned CFO. CEOs should recognize these experiences as a very important attribute of a CFO.  Remote working has cost benefits and the pandemic has proven that a more agile setup is possible and, when properly implemented, works well for both large and small organizations.

Finally, in the context of the challenges facing small businesses, particularly after the pandemic, the key skills that a seasoned CFO brings include:

  1.  Motivation and Encouragement – ensure that all in the company are engaged by fostering an environment of ownership and accountability.
  2. Strategy Guidance – provide strategic counsel based on accurate internal and external data that identify opportunities and risks.
  3. Risk Management – ensure that a company’s risks are identified, assessed, managed, and integrated into the overall corporate strategy.
  4. Protecting Profitability – during an economic downturn, the overriding goal of a CFO is to defend profitability.  A seasoned CFO has the expertise to assess the situation, build an appropriate plan, and assist in the execution that protects the bottom line.
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