Insight & Analysis

Treasurers take note, this is what it takes to become a finance leader

Published: Jun 2017

A new report by Oxford Economics and SAP highlights six traits that separate finance leaders from the rest.

Treasury professionals looking to become a CFO should take note of Oxford Economics and SAP’s new report into what it takes to become a ‘finance leader.’

The report highlights six traits that define a finance leader. These include having a strong influence beyond the finance function; driving strategic growth initiatives; improving efficiency with automation; handling regulatory change; collaborating regularly with other business units, and being effective at core finance processes.

Somewhat surprisingly, only 11.5% of the 1,500 CFOs and senior executives surveyed demonstrate these attributes.

Improved business performance

Those companies that have CFOs classed as finance leaders, excel, notes the report. These CFOs are twice as likely to have a growing market share compared to non-leaders. They have a tighter handle on costs and they use technology effectively. This makes them less likely to complain about outdated technology preventing them from achieving their business goals.

As a result, CFOs at these companies find themselves becoming more visible in the organisation. “Eighty three percent of respondents at companies where revenues rose by more than 5% over the past year say their finance function’s influence and visibility has increased across the organisation,” the report says.

The art of collaboration

One effective method of increasing the influence and visibility of the finance function is to go out into the business and make sure they know it exists. More than that, strategic treasury professionals go out into all corners of the business to partner and collaborate with business units, acting as an enabler of growth.

Interestingly, the report from Oxford Economics and SAP says that whilst most CFOs claim their finance function works closely with internal audit, risk management and compliance, very few go out into other areas of the business.

A CFO that can break down these silos can be a CFO that drives improved corporate performance. Indeed, the report notes that 46% of companies with zero or negative revenue and profit growth highlight an isolated finance function as a major impediment to achieving their goals.

Financial departments that work together with customer-facing parts of the business are more likely to drive commercial success.

Driving efficiency

Driving efficiency across the finance function, and thus business, is another hallmark of CFOs that can class themselves as finance leaders.

A key aspect of this is using technology to automate non-value adding and repetitive tasks. Seventy three percent of those surveyed said that automation is improving their finance functions efficiency. Those that are not using technology to automate are doing so at the expense of growth – there is a straight line from efficiency to performance.

Using automation is fine, but implementing new technology without disrupting day-to-day business is a bit like fixing a car engine whilst driving it. Indeed, respondents cite not disrupting day-to-day operations as being the biggest hurdle to implementing new technology.

Automation should not come at the expense of jobs if you are to be a finance leader. Indeed, 85% of companies say that headcount is remaining steady and that the most profitable companies are likely to have a higher finance headcount. Automation, therefore, is not killing jobs, it is just allowing organisations to utilise their people in more value-adding ways.

Risk and reward

A mainstay of any finance leader’s skill set is the ability to manage risk – something that has undeniably become more complicated in recent years.

From cyber-security to regulatory risk, 68% of executives surveyed consider optimising risk management and compliance a top business goal.

On the cyber front, most acknowledge the real risk posed by cybercrime. However, the report cites that cyber-security – controls over data privacy and breaches – was not as big a concern suggesting that this might be a dangerous blind spot for many organisations.

According to the report, most CFOs say their finance department is equipped to adjust to new regulations as they occur. Only 16% say they are well-equipped.

Those well-equipped teams are leveraging technology to better manage the risks as they evolve. This minimises the risk of human error and automates routine compliance tasks.

Treasury to step up?

Where once perhaps the scope of treasury was too narrow to be a launchpad to the C-Suite for aspiring CFOs, the growing strategic nature of the function means that more treasurers are gaining the skills they need to make the jump to CFO.

Indeed, many treasurers with these aspirations may find that they are already demonstrating many of the attributes discussed above and are ready-made CFOs.

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