Most of today’s tips for FP&A remain focused on more of the same: data, agility, and speed. More data is needed faster and to cope with a rapidly changing world. That puts Finance in a role to both guide digital transformation and manage the data the business needs to succeed. To keep you current, below are a few insights into how Finance and FP&A leaders are moving forward. We’ve found these articles helpful, and we hope you do, too.
CFO Thought Leadership
Accenture found that “elite” CFOs are becoming so by breaking the traditional “economic guardian” mold and focusing on value creation. Being data-driven is, of course, key, but so is taking more control of strategic decisions and leading digital transformations. “Our statistical modeling indicates that if other CFOs emulate leaders’ behaviors, their companies could as much as double EBITDA over three years.”
The F in CFO is becoming less and less a part of the Finance chief’s role. Being a communicator, story teller, and adept business collaborator is as much a requirement as being a technology leader, strategic thinker, and empathetic manager. “The essential skills for CFO success go far beyond mastery of the financial basics, the ability to adopt popular management practices, or even the intuitiveness to know what the CEO is thinking. Those are just table stakes.”
Modern Financial Forecasting
The art and science of financial forecasting took a decidedly sharp turn in 2020. Historical data is now a questionable indicator of future performance, but higher frequency forecasts using real-time data are helping FP&A create effective forecasts with smaller data sets. Other digital solutions, like automation and novel external data sources, are filling some of the other gaps. “This absence of historical established trends, macroeconomic uncertainty, and the constantly changing landscape have made forecasting significantly more challenging.”
Reducing risk in 2020 forced many CFOs to discount and replace their traditional, backward-looking forecasts with advanced analytics. But, in the transition, many companies found they have real influence over just a tiny fraction — a mere 15% — of the variables that influence business results. That’s pushing more CFOs to demand real-time data and analytics to make faster decisions based on today’s external data, not yesterday’s internal data. “Financial executives who launch near- or real-time data analytics…benefit from more frequent and timely predictions.”
Diversity and Inclusion
While the average corporation consists of 42% women overall, women make up 52% of all Finance workers. However, people of color account for just 11% of the Finance total and 6% of senior financial roles. That makes finance and accounting among the worst in terms of diversity. But, with Finance having such an outsized role in workforce planning and development, the solution resides with the CFO. “Finance leaders can wield significant power in ensuring a diverse c-suite.”
Of the 674 companies on the Fortune 500 and S&P 500, there are only 43 women CEOs and 85 women CFOs. That’s roughly 6% and 13%, respectively. Here again, the CFO has immense influence over improving diversity at all levels, from recruiting more diverse candidates to implementing mentorship programs. “CFOs cited a variety of practices related to leadership, including hiring diverse leaders into senior roles, creating a culture of inclusion, and establishing regular reporting on diversity.”
Stay Tuned for More Useful FP&A Content
Check back for these occasional resource roundups with links to timely, helpful, and thought-provoking content for FP&A and CFOs. If you have comments, questions, or suggestions, please engage with us on Twitter, LinkedIn, and Facebook.