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Future of the Chief Financial Officer’s (CFO) role as “Chief Future Officer”

The CFO is more than a financial steward in today’s dynamic & changing world during & post Pandemic. The contours of cost, compliance, and transformation have expanded astronomically in this challenging time. They command a bird’s eye view of the organization and lead as strategic business partners to the CEO. Their role in the pandemic has been largely focused on reducing debt, raising resources, improving ratings, and coordinating with regulators, board members and auditors.

Finance leaders in India over the last 5 years (since 2016) have witnessed myriad changes including Demonetization, GST, eWay Bills, ITC claim restrictions, e-invoicing, SEBI’s Corporate governance requirements and stricter compliances. Compliance and the cost of compliance have gone in recent times with Regulators and large investors getting strict with governance expectations. Research has found that Strong compliance is a signal of quality for investors while making investment in a Company or group.

We envisions a future where a CFO will have to deal with a greater level of business process automation, AI-based surveillance for tax compliance, interlinked direct and indirect tax systems, greater interaction across vendors and SCM ecosystems alongside a proliferation of a technology-led transaction processing wherein authorities like Income Tax, GST, Banks (lenders), DRI, MCA Etc. Even Auditors (both Internal Auditor & Statutory) have become aware of this changing dynamics and are ready to use technology led audits rather than deployment of onsite people.

We are moving from a rule-based to principal-based compliances in an era where Promoters and Management are under constant watch by Investors, Media, Regulators & Government.

A key to the evolving role of the CFO has been the concurrent economic scenario. Some corporate sectors have benefited from the low-cost, work-from-anywhere model while others have suffered irreparable losses, leaving them thinking about when the economy is going to fully recover.

Digital transformation in operations and transactions has always had a place on the CFO agenda, but it has now claimed the top spot. A necessary contactless economy seemed the most fertile ground for bridging the digital infrastructure gap, leading us to question the role of cash and the concept of the currency itself. Technology has slipped from the shotgun seat of an enabler to that of a driver.

Cloud adoption and intelligent automation along with superior internet connectivity such as 5G and biometric payment authorization are future of transactions. There is a rise in the popularity of digital currency as many top companies have allowed acceptance of cryptocurrencies like Bitcoin while many Central Banks are still looking at CBDC (Central Bank backed digital currency).

Business models, economic ecosystems, the external environment are all changing rapidly before us thanks to technology. It helps offer superior cost advantages, operational improvements, predictive data insights, and in better management of stress scenarios. From the seat of a CFO, these help drive changes proactively rather than reactively.

The next step in this journey is an integration of data with forecast stimulation, converting non-financial data points into financial numbers and making this data accessible to all the members of the organisation so they can better use them.

ESG (environmental, social, and governance) and sustainability goals are new buzzwords in investing communities as the corporate responsibility towards the environment extends beyond societal consciousness to investor mandate.

The term VUCA (volatility, uncertainty, complexity, and ambiguity) has long been a word of common parlance in business circles. It is a term also fundamental to human nature which will now reign supreme as businesses become more people-first.

Chief Future Officer

Ø As time passes and the world becomes increasingly digital CFO has to provide leadership to align Company with changing dynamics.

Ø CFOs will need to be strategic leaders and leverage timely, accurate and actionable insights to help steer their company to a strong future.

Ø When developing growth strategies of the Company, CFOs need to explore all opportunities, including the right skills, people and technology to deliver superior customer experience.

Ø The concept of quarterly reviews and annual outlooks are slowly becoming obsolete in an age of weekly reviews and monthly outlooks.

Ø CFOs will need to be strategic leaders and leverage timely, accurate and actionable insights to help steer their company to a strong future.

Ø We live in a hyper-connected world characterised by a single constant – disruptive change. Technologies such as mobile, IoT, cloud, advanced robotics and artificial intelligence are transforming lives and the CFO has to prepare Company for this and align way business is conducted.

Ø CFO’s role has evolved and the ways in which they can transform the finance function, drive innovation, and leverage analytics while mitigating risks from digitisation.

Ø The CFO of the future will need to be an economist who is comfortable with IT apart from the traditional responsibilities like Finance, Costing, Accounting and Taxation. Economists are the persons who perform job in context to identify various problems that are uplifting a company, find out various reasons behind these problems, analyze their effects on the functioning of the company and finally suggest rational alternative and corrective measures to be taken by the management. Business Economics is the science, arts, and commerce which directs how scare resources to manage cost (price) effectively and to maximize profit of the business.

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