New research: What’s changing the DNA of the CFO?

The Chief Financial Officer is central to the success of any organization. So any changes to that role, especially if those changes are being driven by broader trends impacting the function of the CFO across multiple industries and operational models, are important to recognize and understand.

Those changes are underway, and they are affecting the “DNA” of the CFO position. Tomorrow’s CFO may have a significantly different profile in terms of background, focus, and responsibilities, versus today’s CFO.

To shine a light on what changes may be in store, Billtrust commissioned Paradoxes, Inc. to conduct an extensive qualitative and quantitative study between 2021 and 2022. It was aimed at defining the current financial challenges facing CFOs and the skills and expectations that will shape the job in years to come.  

Interviews and sessions were conducted with over 500 financial professionals, including current CFOs and others aspiring or on track to take a CFO position eventually.

Those findings were collected and analyzed in a new white paper, “The DNA of Future CFOs: Research Insights.” It reveals the factors that are driving this change in the DNA of the CFO, ranging from technology transformation to the reverberations of COVID-19 on operations and work environments.  

Current CFOs were demonstrative about the range of challenges they (and their peers) face, with several indicating that it was the most “complex” time in their careers. At the macro level, the business challenges cited most consistently included:

• Cash flow is always a concern for financial leaders.
• Hiring amid remote operations.
• Re-evaluating leases, real estate and fixed cost assumptions.
• Operational challenges include supporting remote work scenarios, security issues, and extracting and managing company data across departments.
• Supply chain/materials issues.
• Labor shortages.

Respondents shared that supply chain/materials issues are currently a significant concern impacting various industries (e.g., construction, transportation, biotechnology, and many others). It’s also affecting bottom lines.

“Immediately, the biggest challenge is juggling supply issues. We are having major issues with suppliers getting product to sell.”

– Todd M., Transportation

Respondents also pointed to the difficulty of finding qualified blue-collar workers, even via staffing agencies. In some instances, candidates aren’t even showing up for arranged interviews.

At the white-collar level, they cited the greater competition for top talent, causing an increase in salary demands and driving up costs. It’s especially challenging to recruit for onsite, in-person roles (such as a laboratory or scientific position) due to the increased popularity of remote work.

Our survey subjects stressed organizational and operational issues that need to be addressed to help finance departments overcome the abovementioned challenges. All of these issues influence what makes up the DNA of the CFO position:

• Connecting organizational systems: Linking systems across the organization and having systems ‘talk’ to each other.
• Need for real-time data: Up-to-date information that the CFO can easily view, analyze and share.
• Seizing growth opportunities: Expanding the business, staying relevant and keeping ahead of competitors (with pricing and technology).

The COVID-19 pandemic has caused many issues and challenges. These include remote work environments, safety concerns for staff and customers, layoffs and furloughs, the need to pivot how organizations deliver services to customers and cash flow concerns.

For financial professionals, the negative effects of carrying over outdated models and irrelevant historic data starkly illustrated the need for real-time data and connected systems. Old financial projection models were unhelpful, and historical data did not aid future forecasts. The pandemic made the need for updated data to inform financial decisions even more apparent.

But there were positives, too:

• Most leaders surveyed worked at essential businesses and had received PPP loans, so they had unexpected cash on hand.
• The majority of leaders were agile and able to pivot or make accommodations quickly and managed to avoid losing business. A great deal of updated modeling was accomplished to help guide organizations in unprecedented times as companies had to think “outside the box.”
• To stay afloat financially, leaders had to rethink their work environments to ensure safety and reconsider central aspects of their businesses. These pressures forced them to be more receptive to change.

Agility and flexibility are key

Overall, companies persevered and emerged better off by being agile and adaptable and by re-evaluating priorities. Most described their companies as having accomplished the pivot or “reset” required in response to the pandemic and now see an uptick in orders, pipelines and increased initiatives.

Naturally, economic sentiments were mixed across specific industries and regions, but they leaned toward the positive. One example of how finance leaders made unprecedented adjustments: most participants indicated their firm would never have a larger lease/office relationship than they had at the start of 2020.

“If you don’t have robust, flexible, up-to-date business system infrastructure, you cannot adapt. CFOs need to be more informed by past performance. During COVID, the companies with the best systems (real-time insights, rolling forecasts) were able to spin up liquidity models within a day. Tough decisions were enabled quickly by good systems.”

— Tristan G., Business Services

While few leaders in the study used the term “transformation,” most were eyeing or have launched transformational activities, usually in multi-step projects. These will potentially impact the organization in profound ways, obviously, and thereby impact the DNA of the CFO:

• Many respondents described struggling to identify the best platform and feature set for the scale of their firm.
• The common ambition of respondent leaders was to identify workflows or processes where a platform could automate low-value time and tasks (e.g., in accounting and finance reporting).
• At a higher level, several participants also articulated more complex desires, such as rearchitecting databases or crafting integrations across formerly disparate systems or functional areas.

Areas for innovation

The most acute desire expressed by the respondents was to unlock company data for easier exploratory views and analysis. There is a belief among both recently appointed CFOs and aspiring CFOs that better access to and knowledge of the company’s data (across customer, product and internal operations) will drive innovation for the firm. 

Automation, data analytics and the integration of systems across the organization were considered central to being effective and competitive in the future:

• Automation: Automated processes (such as automated payments and automated reports) are considered incredibly important for the future. Automated processes can free personnel for other tasks. However, finding a balance that still values individuals as an organization’s greatest asset.
• Data Analytics: There’s enormous value in data analytics, and being able to access data quickly, view the proper metrics, construct the right models, and streamline or eliminate manual processes renders the organization more efficient. As respondents cited, it’s important to have all accounting and finance systems, such as ERP systems and SaaS applications, “talk” to each other. From a CFO’s perspective, all systems are related since finance gets impacted by all aspects of the business. Overall, better data analytics enable an organization to make smarter financial decisions.
• Integrating and updating systems: Organizations are upgrading systems and implementing new software. It’s crucial to have new systems integrated with existing systems. If organizations are not actively implementing a new system, many are researching, evaluating and considering options. Others already recognize specific changes that need to happen in the short term (1-3 years). Most of the innovations pursued relate to improved data, faster reporting, budgeting tools and payment processes.

“Automate everything you can that makes sense. Take the savings and reinvest back in the business.”

— Mike B., Food and Beverage

All of the factors above are driving changes within organizations large and small. Those changes are being reflected in what constitutes the functional DNA of the CFO within a company.

As the future role of the CFO white paper explains, their position is already being re-defined by these forces. As you'd expect, accounts receivable automation and other technology platforms contribute to that evolution. But a surprising array of changes is underway that involves more than the ability to work with new software platforms and data analytics. 

A “horizontal mindset” is taking hold that relies less on the skills and education expected of past CFOs. It involves levels of cross-functional collaboration and managerial engagement that are new to the DNA of the CFO. This sea-change will have resounding impacts on financial departments and their corporations.