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The Modern CFO in a Medium Sized Company

In our last blog we wrote about how technology changes the expectations about the finance function. We also pointed out how the so called gig economy is harboring new opportunities for both, consumers and providers of finance & accounting services. Following the publication I received a few comments inquiring about the characteristics of a modern CFO and what skill set is required.

Before diving into the matter it might be worthwhile to ringfence against the CFO profile in a bigger or multinational company. In such an environment the strategic dimension and management skills covering several organizational layers take a prominent role. In an SME the hierarchies are flatter, the owner or partners are hands-on and very involved in the details of the day-to-day business. They typically have a tight grip on strategy, expansion, growth etc. But, there are qualities that a CFO has to have in both environments. These are qualifications, integrity, human skills, leadership to name only a few.

However, I see 6 skill sets that are particularly relevant for a modern CFO in a SME setting:

Technology driven: the first prerequisite is the uncompromising focus on technology for both, the accounting task itself as well as the surrounding processes. Benefits of Cloud-based accounting software such as Xero, that in itself leads to enormous efficiency gains, can further be enhanced by SaaS add-ons. These can cover expenses (Expensify, Receipt Bank), HR management (Talenox), inventory management (CIN7) or project management (WorkflowMax), etc. As a matter of fact, the library of bolt-on solutions for Xero alone would allow an even a small company to create its own Enterprise Resource Planning ERP system with all its advantages.

Inquisitive: The CFO is the only professional in a mid-sized organization that commands over the specialized knowledge to evaluate the merit of new, technology-based solutions in the finance & accounting area. The SaaS industry nowadays offers software that allows SME to be run with the same actual and granular data like much bigger companies, at a fraction of the cost. A situation that was unthinkable only a few years ago.

However, the SaaS landscape is changing all the time. Technology develops and new or improved software is released frequently. Under the pressure to reduce cost a modern CFO is forced to constantly seek to improve on the status quo and look for new and better ways to deliver finance & accounting services.

Experimental: This skill set looks, at first, contrarian to the traditional understanding of the finance function. However, the necessary skill of being experimental goes hand in hand with inquisitiveness.

It is typical for the SaaS industry to release software that then is improved with new features, very often based on user feedback. This situation requires a different approach the evaluation and implementation process. A certain openness to experiment with new, ‘unfinished’ solutions is the consequence in order to take advantage of new and ultimately better solutions.

Another consequence is that new technology requires very often a rethink of how accounting work is done. The redesigning of processes and the ensuing reorganization of roles & responsibilities becomes an ongoing focus. Under the leadership of a modern CFO an organization will have to change much more often than in the past.

Paperless: this skill might sound outright revolutionary if not impossible to achieve. However, having run my finance & accounting office paperless for more than 5 years I can attest that it works.

The wide availability of Cloud-based storage in combination with the ever more powerful search functionalities of Apple’s Spotlight or Windows Search are the basis for this. The retrieval of electronic records vastly outperforms that of a manual system in terms of speed and convenience. Many times such searches are not even necessary after supporting documents can be directly attached to the respective accounting record.

Fortunately, Governments, and in particular the revenue department in Hong Kong, are accommodating in this regard and accept electronic records as long as they are a representation of the original document.

Service mindedness: whilst this is not a new requirement for the CFO role or singularly applicable for SME I believe it is so important that I include it here as a continued prerequisite. In an environment where speed and the smallest competitive advantage are decisive for success the modern CFO of an SME has to have a relentless focus on supporting the business.

In summary, the modern CFO for a SME has in addition to the traditional set of skills characteristics that will help the business to reap the benefits of technology based solutions. The role thus becomes even more critical for the growth and ultimately success of a company.

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