The Financial Times’ management editor, Anjli Raval, recently wrote about Why more Chief Financial Officers (CFOs) are becoming Chief Executive Officers (CEOs). She highlights the significant evolution of the CFO role over the past decade. Beyond traditional financial duties, CFOs now play a crucial part in shaping corporate strategy, managing deal activities, focusing on sustainability, and leveraging data analytics.
Financial consultant and former corporate CFO Andrew Walker of Improcus emphasised the importance of having a good CFO for business performance in a recent Economics Explored podcast episode I recorded with him. Andrew notes:
“A lot of finance departments are seen as an overhead, an extension of the ATO to do the BAS and the GST and the PAYG, etc. But the finance department in a good business provides really quality information to help people make good decisions around what they do in their business.”
You can listen to the conversation via podcast apps (e.g. Spotify) or the embedded player below. A transcript is available on the Economics Explored website.
Andrew emphasises the need to unlock and look inside the “financial black box,” This approach involves demystifying the complex, often opaque financial operations within a company to foster a deeper understanding of its financial health and operational efficiency. By opening up this black box, businesses can pinpoint inefficiencies, uncover hidden costs, and identify opportunities for improvement that were previously overlooked or misunderstood.
Walker emphasises the critical role of financial transparency and literacy across all levels of management. When leaders and managers have a clear view of their decisions’ financial implications, they can make more informed choices that align with the company’s strategic objectives. This insight enables a shift from reactive problem-solving to proactive management, where decisions are guided by financial data and strategic goals rather than intuition or habit.
Moreover, unlocking the financial black box encourages a culture of accountability within an organisation. Businesses can cultivate a more engaged workforce by making financial performance a shared responsibility. Managers and employees become more invested in their roles, understanding how their actions directly impact the company’s bottom line. This shift improves financial outcomes and enhances employee morale and commitment.
Platforms like Jedox, as discussed by Andrew Walker in the podcast episode, offer a revolutionary approach to managing business finances and operations by integrating data across various segments of a company into a coherent, accessible system. This comprehensive tool allows businesses to automate complex financial processes, enhance forecasting accuracy, and streamline budgeting and reporting. By providing real-time insights and analytics, Jedox enables decision-makers to identify trends, pinpoint inefficiencies, and make informed strategic choices. Furthermore, its ability to connect financial outcomes with operational drivers transforms raw data into actionable intelligence, fostering a culture of data-driven decision-making. Consequently, Jedox simplifies the financial management landscape and empowers businesses to improve performance, optimise resource allocation, and, ultimately, drive profitability.
In conclusion, unlocking the financial black box transforms the finance department from a back-office function to a strategic partner in the business. This change leads to a more agile, responsive organisation that can adapt quickly to market changes, optimise operations, and confidently pursue growth opportunities. The result is a business that is more efficient and profitable and better positioned to navigate the challenges and opportunities of the modern marketplace.
Published on 25 March 2024. This article was prepared by Adept Economics Director Gene Tunny. For further information, please email us at contact@adepteconomics.com.au or call us on 1300 169 870.