The Role of a CFO: motivating people, managing assets and hedging risks. Денис ДубовцевЧитать онлайн книгу.
control, the desire and ability of companies, their shareholders and management to enter international markets and attract capital through IPOs, all led to a rapid shift in financial management priorities. It became critical to demonstrate consistent growth, invest in electronic sales channels and business digitalization, sometimes at the expense of customer acquisition efficiency. Shareholders and executives encouraged financial teams to focus not just on business efficiency and operational automation but also on rapidly expanding into new regions and launching products, using external funding obtained through promising forecasts and creative reporting.
Furthermore, starting in 2020, the impact of the pandemic, accelerated business digitalization (driven more by necessity than by trends), geopolitical tensions, and the resulting fragmentation of the once-global world, intensified competition across most industries and significantly complicated operational processes, particularly for companies with access to international markets. Dependence on foreign suppliers and investors became more pronounced, and challenges arose in obtaining financing from foreign banks, as well as in purchasing equipment and raw materials.
In the past, organizations prioritized performance growth at any cost, often at the expense of investors or margins. Today, however, the focus has shifted towards profitability and operational efficiency, especially for medium-sized businesses. Those who survived the drying up of cheap international funding – successful entrepreneurs and senior managers – realized that sustainable business development requires the establishment of regular management accounting, an internal control system, and end-to-end process automation. Ultimately, this demands a radically new approach to company management, based on modern, comprehensive financial management principles.
Among recent trends, there’s a movement towards adopting an effective service-oriented approach within organizations. The essence of this approach can be summed up in a simple slogan: outsource what can be done more effectively that way, while internal departments should focus on their economics and adopt a customer-oriented competitive approach, considering market conditions and external competitors.
If an internal function like legal or recruitment lacks customer focus and performs poorly, internal clients may seek external specialists for the same services, leaving internal teams idle. To assess employee performance adequately, tools such as basic financial dashboards with efficiency metrics, departmental and team income and cost comparisons against market benchmarks, along with customer satisfaction indicators, are essential. This includes developing methodologies for calculations, data collection, interpretation from various sources, process automation, and engaging with end consumers, who are also internal clients of the financial department, and evaluate the services provided. Customer orientation and marketability of obtained services are paramount.
The tasks outlined above undoubtedly fall within the purview of the CFO and their team, presenting a new challenge for the profession. It’s crucial to not only realign oneself but also to transform the work and mindset of teams (if not done already) and assist the entire company in this transformation. This underscores the pivotal role of the CFO, the primary responsibility of the financial planning and analysis manager, and the key function of financial business partners.
From Accountant to Business Partner
What does the modern approach to financial management entail? It’s a system-building endeavor where every process within a company, every business initiative, should contribute to achieving its strategic goals, both quantitatively and qualitatively. While financial management is often perceived as solely quantitative, focused on numbers, in reality it goes beyond that.
Modern financial management primarily revolves around setting and achieving strategic business goals, emphasizing a select few critical quantitative and qualitative objectives, and adapting plans flexibly to rapidly changing external factors and competitive landscapes. It delves much deeper into business processes compared to traditional «accounting» financial management.
The conventional financial department typically comprises accounting, finance and treasury. In modern companies, these departments are augmented by automation and financial system support, along with financial coordinators handling month-end closures with client-contractors, monitoring accounts receivable, and managing client credit limits. Moreover, financial directors have expanded responsibilities encompassing shareholder and investor relations, corporate governance (often incorporating the ESG agenda or «Environmental, Social, and Governance»), legal services, compliance control, risk management, and HR document flow.
A recent trend has emerged: service departments are supplying businesses with functional experts – internal business partners – who are incentivized by the company’s overall performance, possess a deep understanding of operations, and aid employees in commercial departments with issues related to the corresponding internal service (or external if outsourcing is involved), be it HR, logistics, finance, legal affairs, and more, tailored to the industry.
Distinguished from regular employees in service departments, business partners boast extensive experience and expertise in related functional or commercial fields. They possess profound insights into the production process and are relentlessly focused on achieving departmental and company objectives.
Typically, a financial business partner is a former financial controller or experienced financial analyst. Although accountants less frequently assume this role, it presents personal, professional, and career advancement opportunities, safeguarding against professional obsolescence. This aspect will be explored further on.
A financial business partner aids business units or subsidiaries in addressing operational budgeting and long-term planning tasks, calculating unit economics, and conducting financial modeling. They operate as a financial team member within a business unit, closely supporting functional or business leaders in collaboration with internal financial services.
Having a specialist within the business unit benefits the financial team. They immerse themselves in operational tasks, assist financial coordinators in period closures with clients and counterparties, manage budgets within the unit, analyze actual versus planned results, and engage in ongoing planning.
Becoming a business partner necessitates a broad, forward-thinking perspective, a steadfast focus on the company’s overall results, strategic goals, and future development, transcending the narrow goals of a service function. Successful business partners must be subject matter experts, possess deep insights into the company’s processes, be well-versed in the competitive landscape, exhibit independence, responsibility, agility in learning, and undoubtedly, substantial professional experience.
Given the geopolitical shifts, economic structural changes, and the evolution of the financial profession since the turn of the 21st century, I firmly suggest that any modern financial manager or forward-thinking accountant aspiring to maintain competitiveness in the job market will need to transition into a business partner role in the foreseeable future.
Allow me to share an example of one of my colleagues. Initially a traditional accountant, she temporarily had to leave her profession due to relocation. After working remotely in a call center for some time, she showcased her capabilities and earned the opportunity to serve as an accountant in a company where she started as a remote call center employee and later became a team leader.
Her profound understanding of operational processes, gained during her stint in the call center, swiftly propelled her beyond her accountant role, essentially transforming her into a business partner. Eventually, she rightfully assumed the position of chief accountant in the company. She diligently enhanced her English language proficiency, revamped conventional rigid accounting approaches into customer-centric and service-oriented ones, and broadened her scope of responsibility beyond traditional accounting to encompass methodological aspects.
Additionally, she spearheaded the establishment of an active and expanding professional community through a chat in Telegram, which not only assists colleagues and enhances the quality of the accounting environment in her home country, but also contributes to the development of her personal brand.
This example illustrates a challenging yet commendable journey from a conventional accounting role to a multifaceted, self-developing financial business partner – a role emblematic of the future.
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