21ST CENTURY CHIEF FINANCE OFFICER

The 21^st CENTURY FINANCE FUNCTION - A PERSPECTIVE.

The role of the finance function has changed dramatically over the last 100 years and this is reflected in the stated objectives of every corporate organisation, which include:

·         The development of strategic thinking, decision-making and strategic analysis and management skills to develop the organization’s mission and objectives and carry out strategic analysis and decision-making.

·         To understand the relationship between financial planning, forecasting, and budgeting and the integration of the strategic management process with the budgeting cycle.

The role of 21st century finance function deals with some of the key financial skills and challenges:

·         Cost analysis

·         Continuous improvement of cost assignment

·         Budgeting, management control, and performance evaluation

But to operate an effective planning and control system finance professionals can no longer work “in a vacuum” relying purely on financial and accounting skills; the course also addresses other skills and some key issues:

·         The relationship between vision and business strategy

·         Defining strategic and operational objectives

·         Selecting targets for advanced performance measurement

·         The evolving role of the chief finance officer - CFO and the finance team.

The Chief Financial Officer of the 21^st Century

Today’s CFO is under greater internal and external scrutiny than ever before.  CFOs face never ending pressure to cut costs, grow revenue and maintain control; given the current economic uncertainty, increased regulatory requirements and closer investor scrutiny there is no sign of this pressure abating.  Today’s CFOs are expected to play four diverse and challenging roles.  The two traditional roles are:

·         Steward: preserving the asset of the organization by minimizing risk and getting the books right, and

·         Operator: running a tight finance operation that is efficient and effective

In the highly competitive world of the 21^st century it’s increasingly important for CFOs to also carry out two other key roles within the organization:

·         Strategist: helping to shape overall strategy and direction, and

·         Catalyst: instilling a financial approach and mind set throughout the organization to help other parts of the business perform better.

These four varied roles make a CFO’s job more complex and demanding than ever.

Steward

Accounting control, risk management and asset preservation are the province of the steward.  The steward must ensure company compliance with financial reporting and control requirements, a role which, since the advent of International Financial reporting Standards - IFRS framework has become increasingly demanding.  Information quality and control rationalization are top priorities for the steward.

Operator

Efficiency and service levels are the main areas of focus for the operator.  The operator must balance cost and service levels in delivering on the finance organization’s responsibities, adapting the finance operating model as necessary.  Talent management, off shoring and shared service decisions are some of the key issues to be addressed. 

Strategist

The strategist is focused on defining the future of the company to enhance business performance and shareholder value; key responsibilities of the strategist CFO are

·         To provide a financial perspective on innovation and profitable growth

·         To develop the financial perspective to improve risk-awareness, strategic decision-making and performance management integration

·         To translate the expectations of the capital markets into internal business priorities, key performance measures and results indicators.

Catalyst

The catalyst is an agent for change, focused on establishing a value attitude throughout the organization. The catalyst gains business alignment to identify, evaluate and execute strategies, and serves as a business partner to other decision makers including SBU managers, the chief information officer, and sales and marketing leaders.  The catalyst establishes a structure of enterprise accountability for results, drives enterprise execution and gains acceptance from business management as the organization’s catalyst.

Jerome C. Njoku ACA, AMNIM.

FINANCE DEPT.