In a short space of time, the CFO agenda has changed dramatically, and with this a wealth of new requirements have been added to the job description. The economic ante has been upped, thrusting the CFO into a linchpin position, leaving behind a more straightforward supporting role to business units and sales divisions, now charged with realising value, increasing margin, and rigorously implementing business change.

In times of greater stability – secure supply chains, steady economic growth, for example – the absence of crises did not necessarily present a conducive environment to evolve the role of a CFO. However, the intense disruption experienced since the turn of this decade has elevated the position to sit squarely alongside the CEO as second-in-command.

In truth, the pandemic itself was just the start of three years of turmoil that followed for companies. Rapid cost inflation, supply chain disruptions, FX-related issues with a depreciating Euro, and rising interest rates and debt burdens have demanded new levels of clarity and transparency from CFOs. And all that on top of the ongoing mega transformative changes such as quickly evolving digitalisation, sustainability, and demographic shifts. It has never been harder to guide business decision-making in such choppy waters, with a watchful eye always on the cash impact to the P&L. The power of the role has increased exponentially; when companies have been in good shape cash transparency hasn’t always been a core focus, but now the CFO has become an orchestrator rather than an operator.

The growing influence of Private Equity

Private Equity investors are also gaining increasing importance in almost every industry, raising the stakes for their portfolio companies. Here, the language of finance rules, making the CFO a critical interface as PE ownership requires a meticulous understanding – and communication – of cash, working capital, and financial planning positions. The mantra of shareholder value and the strategic role of mergers and acquisitions are yet more key drivers behind why the CFO has become more integral to an organisation overall.

Timely delivery and a defined ambition level regarding value creation require the highest performance in the role. During “easier” times, acquisition diligence may have focused more firmly on sales pipelines and revenue generation. Smaller bolt-on acquisitions have in the past benefited from valuation jumps by mere inclusion in PE portfolios. Today, the increased scrutiny upon deals that must deliver in a more challenging climate mean CFOs must apply a more rigorous approach in building and stress-testing value theses. Post-merger integration with a sharp focus on cost efficiency – without compromising on value creation – is key. This may be the harder path for a CFO to manage, but a mindset for acting quickly and decisively versus not acting at all will always win out.

As we have seen in the last few years, anything can happen – those who were quick to double down on cash planning during COVID saw the positive results of these early, difficult decisions. Scenario planning for the unthinkable provides the opportunity to develop ways to mitigate any challenge in value-driven and value-preserving ways, rather than the old world of simply trying to “sell more”.

Mediator, motivator, value creator

We can see interest rates continuing to create difficulties in refinancing and geopolitical tensions disrupting a return to more stable economic times. All of this will increase the pressure on financials and companies’ ability to operate more efficiently.

At a time when looking to the future has rarely been so beset by fog, what company wouldn’t want to elevate and be guided by an individual with the fullest financial picture possible of their business – regionally, functionally, and chronologically?

That will, in many cases, require deep culture change. This is a shift that CFOs must thrive in as a mediator that brings the transparency and trust to work with broader business partners. Whether it be in rationalising cutbacks or price increases, if delivered from a position of holistic financial understanding – from product profitability to the global outlook on emerging trends affecting costs – positive collaboration and ultimate business success can be achieved, all the while satisfying cash needs.

Deep financial analytical skills are now table stakes in our heavily disrupted world. Now, the challenge is to mediate, motivate, and balance all company interests in a way that pushes value creation right to the top of the CV for the CFO of 2023 as navigator in a highly disrupted world.