CFOs: No Longer Mere Corporate Scorekeepers

CFOs: No Longer Mere Corporate Scorekeepers

By L.R. “Skip” Sorenson, CFO, Imagine Communications

L.R. “Skip” Sorenson, CFO, Imagine Communications

Focus on Robust Financial Model

I believe the place to start is with a robust financial model or plan. Having a baseline of performance will enable any changes to be considered and a determination  made of the impact to the business’s value. Modeling of changes to the firm’s strategy, developing new products, adding complimentary businesses, investing in a  factory or machinery, etc. can quickly be assessed. We use an integrated financial model that allows us to determine how changes will affect income, cash, and overall shareholder value. The second area that a CFO needs to understand is what are the variables within the business that drive value and then add those  “drivers” to the model in order to adequately simulate value generating activities. This is commonly known as identifying the “buttons, levers, and switches” that move  the business. I have had the most success learning these influencing items by working directly with business unit or functional leaders and obtaining intimate knowledge of their businesses or functions. Spending time on  the factory floor, sitting down with engineering, even taking a ride on a delivery truck can provide a  better understanding of the value creators in the business. Lastly, real time metrics, dashboards, and “Key Performance Indicators” (KPIs) are key to driving the  sought after performance. Having daily and weekly data to monitor performance against objectives allows an organization to make mid-course corrections. Waiting  until the end of a month or quarter does not allow time for recovery if performance is off-track. These three areas- robust financial modeling, understanding the  business drivers, and then monitoring them through data analytics can enable a CFO and their finance organization to have a seat at the table in driving “Shareholder Value”.

"The key to Finance providing value to an organization is having a finance team that is high powered and very capable"

Weekly Brief

Top 10 Financial Reporting Solution Providers - 2019

Read Also

The Business of Service Management

The Business of Service Management

Mitch Kenfield, Principal, CIO Advisory Practice, KPMG US
Out of the Box or Build Your Own?

Out of the Box or Build Your Own?

J Douglas Maxwell, Chief Financial Officer, American First Finance
The Future of Finance is not New Technology. It is People

The Future of Finance is not New Technology. It is People

Deepak Chandran, Senior VP & CFO, International Business, Wipro Consumer Care [NSE: WIPRO]
How Data Will Techify Finance Teams of the Future

How Data Will Techify Finance Teams of the Future

Mia Barry, Chief Financial Officer, THE ICONIC
Ensuring Security and Thwarting Cyberattacks

Ensuring Security and Thwarting Cyberattacks

Ron Dinwiddie, EVP & CIO, Texas Trust Credit Union
A Global Understanding Imperative in the Automotive World

A Global Understanding Imperative in the Automotive World

Dennis Hodges, CIO, Inteva Products