It might seem like a steep ascent to that lofty seat on the executive board as a CFO, holding the most senior financial position in the company. However, the path upward for young finance professionals is well-trodden and there’s a lot of help to be found along the way. What waits for you at the top might be a potentially stressful and challenging role, but it comes with a high level of satisfaction, as looking down from your high vantage point, you’ll be seeing your company grow and succeed.
Getting there won’t be easy, but before embarking on this long climb to the top, why not do a kit check to make sure that you have the basics and identify any skills and competencies you might need to acquire along the way?
What do you need on your CV to become a CFO?
- Relevant qualifications, including your degree or certificate, whether in finance, accounting, economics, business management, business admin, or banking; an accredited qualification from a professional body such as ACCA or CIMA and an MBA is also helpful!
- Evidence of relevant industry experience and success in previous accounting roles such as accounting manager, team leader, financial director or financial controller. Showcase your career trajectory using concise bullet points to mention daily duties and accomplishments with specific examples
- Evidence of the hard skills you have been working so hard to develop throughout your career to date (more on this in a bit).
- You’ll need to show that you are up-to-date with developments in fintech and cybersecurity and be integrating them into your working practices to help your company succeed. You also need to be aware of emerging tech tools in your company’s sector that will boost productivity, minimise risk and keep your company ahead of the curve.
- Evidence of your ability to think critically. You’ll be inspecting lots of financial data to provide meaningful insights and analytics to improve company growth and profits.
- Evidence of an understanding of your sector and your company’s competitors as well as the overall market. You’ll be collaborating with other departments to assess their most important functions and make sure they’re financially viable.
- Evidence of leadership experience. Not only will you have a finance team to manage but you are going to have to help steer the whole organisation. You are going to need great communication and interpersonal skills both internally and externally. If yours are lacking, start working on them now!
- Evidence of your ability to work as a part of a team. After all, as a CFO you will be part of the executive team!
What technical skills do you need as a CFO?
Well, here is an exhaustive list of everything you’ll be doing and all the skills that you could possibly need to master!
- Budgeting and Forecasting
You’ll create annual and multi-year budgets for the whole company and regularly break them down for each department head as well as establish a rolling forecast for continuous fiscal planning. To manage budgets efficiently you’ll need to be able to use automated software, build strategic goals into budget KPIs, compare actual against budget and analyse variances as well as monitor industry trends against budget forecasts.
- Cash Flow Management
You’ll have to implement a rolling 16-week cash flow forecast to monitor inflows and outflows and a multi-year cash flow forecast integrated with multi-year income statement and balance sheet forecasts. You’ll also have to optimise cash utilisation through weekly cash flow analysis. Then you’ll need to evaluate the impact of cash flow financing strategies and scenarios on critical cash flow and solvency ratios and use cash management software for real-time data. You’ll have to maintain a reserve or line of credit for emergencies and implement a robust accounts receivable collection process. You’ll need negotiation skills too to agree on terms with suppliers that enhance your cash position.
- Financial Analysis
You’ll need to be able to calculate, forecast, analyse and monitor key ratios and financial metrics and regularly update forecasts with actual results. You’ll have to use vertical, horizontal and benchmark financial statement analysis for financial performance trends. You’ll also have to track financial covenants and ensure current and projected compliance. You’ll need to be able to define custom KPIs and align them with business strategy, then monitor them in real-time via a customised dashboard as well as implement predictive modelling techniques. You’ll also be reviewing monthly financial performance results with key stakeholders, and discussing KPIs, ratio analysis and variance analysis findings.
- Working Capital Management
You’ll have to know how to implement efficient inventory management to minimise carrying costs, prevent stockouts and optimise levels. You’ll need to standardise trade terms negotiations and enforcement as well as implement efficient and timely supplier payment processes. You’ll also need to be able to negotiate terms with suppliers to optimise payables and implement efficient and timely supplier payment processes. You’ll have to monitor, optimise and forecast the cash conversion cycle and use technology for procurement and payment processes. You’ll be conducting periodic analyses of working capital needs and developing contingency plans for potential shortfalls as well as training your team in effective working capital management.
- Capital Structure
You’ll be monitoring current and projected solvency ratios to ensure covenant compliance and financial health. You’ll also be regularly monitoring the market for financing opportunities and borrowing cost savings then communicating capital structure strategy with stakeholders. You’ll have to evaluate the impact of current and future financing needs on financial health and ensure optimal matching of sources and uses of capital. You’ll regularly monitor the company’s credit rating with rating agencies and risk profile with lenders and ensure capital structure supports business growth, investment and distribution objectives.
- Risk Management
You’ll implement a comprehensive risk management framework and ensure that all significant financial risks (credit, interest, rate, currency, liquidity) are identified, quantified and managed. You’ll also implement mitigation strategies for market risks (interest rate hedging, foreign exchange hedging, diversification) and also implement strict credit policies and collection processes and secure insurance coverage for significant credit risks. You’ll implement cash reserves and robust cash flow forecasting to ensure sufficient business liquidity as well as strong internal controls to reduce operational risks and secure insurance coverage. You’ll have to conduct quarterly risk reviews.
- Tax Planning
You’ll be utilising available tax incentives and credits and tax-efficient business strategies that also meet long-term business objectives. You’ll regularly review the organisation’s transfer pricing policies and ensure timely and accurate tax filings. You’ll need to stay informed on changes in the tax laws to conduct internal tax audits to ensure compliance. You’ll also need to consult with tax advisors on complex tax issues.
- Financial Reporting
You’ll ensure timely and accurate financial statements whilst implementing strong internal controls for financial reporting. You’ll regularly review and update accounting policies and use a reliable ERP system for financial data management. You’ll train the finance team on the latest reporting standards to ensure compliance with regulatory reporting requirements and ensure financial reports support strategic business. You’ll also need to communicate regularly with external auditors.
- Cost Accounting
You’ll be regularly reviewing production efficiency and cost controls and allocating overhead using the most appropriate cost drivers. You’ll use a reliable cost accounting system and train the team on cost accounting principles, regularly reviewing cost drivers and updating standards. You’ll conduct regular cost variance analyses and establish procedures for tracking and reducing waste. You’ll use cost information for pricing decisions and ensure cost accounting reports support strategic decisions.
- Investment Evaluation
You’ll apply a rigorous capital budgeting process for major investments and use techniques like NPV, IRR and payback period analysis. You’ll conduct risk assessments and sensitivity analyses for major investments and train the team on investment evaluation techniques. You’ll have to implement a post-investment audit process and regularly monitor and report on investment performance. You’ll be ensuring investments align with strategic business objectives by evaluating the opportunity cost of each investment. You’ll also need to conduct regular portfolio reviews to balance risk and return.
- Financial Planning
You’ll develop and maintain a rolling 5-year financial plan using scenario planning to assess future financial performance and regularly update financial plans based on actual performance. You’ll use software tools for financial modelling and forecasting and align the financial plan with strategic business objectives. Then you’ll have to regularly review the financial plan with the board and other stakeholders. Monitor industry trends and adjust financial plans accordingly. Conduct periodic reviews and update plan assumptions.
- Mergers and Acquisitions (M&A)
You’ll develop an M&A strategy that aligns with business objectives and conduct thorough due diligence on potential targets to secure financing early for potential deals. You’ll assess strategic fit and potential synergies with the target and develop a post-merger integration plan. As well as communicating the M&A strategy to stakeholders you’ll have to consult with advisors for complex M&A transactions and then train the team on M&A due diligence and integration. Post transaction, you’ll conduct an audit to learn from the process and then, going forward, you’ll be regularly monitoring the M&A market for potential opportunities.
- ESG-Driven Financial Management
You’ll develop a comprehensive ESG strategy that aligns with business objectives and train the finance team on ESG principles. You’ll have to monitor and report on ESG metrics regularly and use ESG criteria in investment decisions. You’ll communicate ESG strategy and performance to stakeholders, engage with ESG rating agencies and respond to their surveys as well as evaluate the impact of ESG initiatives on financial performance. You’ll always advocate for ESG issues at the board level, engage with stakeholders on ESG issues and regularly review and update the ESG strategy.
- People Management and Leadership
You are someone who will foster a positive, collaborative and innovative culture in which you implement effective talent management strategies, developing and implementing a succession plan for key roles. You’ll provide ongoing development opportunities for team members and you’ll encourage and reward innovation within the team. You’ll implement a performance management system for the finance team and encourage cross-training to improve team flexibility. You’ll seek to implement a system for recognising and rewarding outstanding performance and regularly communicate with the team about department and company goals. You’ll always encourage open and transparent communication within the team.
- Technology and Digital Transformation
You’ll develop a digital transformation strategy for the finance function where you implement advanced technologies like AI, Machine Learning and RPA where beneficial. You’ll use cloud-based financial systems for improved accessibility and scalability and train the finance team to use new technologies. Not only this, you’ll use data analytics to gain insights and support decision-making. Of course, you will implement strong cybersecurity measures and regularly review and update IT policies. You’ll also be keeping an ear to the ground to use digital technologies to improve customer experience, regularly reviewing the technology landscape for new opportunities. You will make sure to develop a technology disaster recovery plan.
So, as you can see, there is a broad skillset required to become a CFO and the role responsibilities can vary depending on the size of business, sector, and growth strategy. When planning your career journey to CFO, it’s important to expose yourself to all areas of finance spanning technical, operational, commercial, and strategic to give you a well-rounded view to get you CFO ready!
Although it may feel counterintuitive for a progressive individual, a sideways step can sometimes be a good move to broaden your skillset and give you the breadth and depth of experience required on your road to CFO. The road is long, but the destination is worth it.
Please get in touch with us at Core3 for all the tools that you need and professional help to progress your career.
