Nowadays, there are more resources and tools available for the modern CFO to leverage. From innovative Artificial Intelligence tech to financial metrics, there is so much to consider. As a modern CFO, you may be wondering where you should be really focusing your attention. From data to forecasting, this article will go over three specific things that every modern CFO should be using to succeed.
The fact is, no two companies are alike. However, that being said, the metrics typically remain fairly consistent when talking about one business versus another. The leaders of finance at either a bootstrapped startup or a fortune 100 company will need to fully understand these metrics if they are going to be able to make wise financial decisions that take into account what’s best for the company.
For instance, just about every CFO will need to have a strong understanding of the business’ current ratio and working capital. Without this, they will be unable to fully comprehend the company’s financial standing. At the same time, the cash flow the company has will allow the CFO’s to figure out how healthy their business operations are and how capable their customers are of paying on-time. Lastly, the CFO needs to be able to accurately view metrics on both sales performance and customer satisfaction in real-time in order to complete proper assessments on the financial health of the business.
A Centralized Dashboard
You may be wondering whether you can make a simple spreadsheet to track everything. Unfortunately, that’s not enough anymore.
While a lot of businesses do in fact have a lot of financial management is done from a simple spreadsheet, it is becoming increasingly common for even medium-sized businesses to take it up a notch. For pretty much any company that has a lot of different products, services, or even regions that they need to cover, a CFO is going to need to have a centralized dashboard that is dynamic and that updates in real-time. That way, they will be able to see the entirety of their company’s metrics at the same time to make better assessments.
What’s even better, when a CFO has a cloud-based system that they can fall back on. This will give them customer records and real-time data that can help them maintain confidence they are making decisions based off real numbers. CFO’s tend to depend on their staff in order to handle some of the most basic tasks including figuring out the margins on a specific service they offer. This can send even the most well-trained staff into complete chaos if they are only using spreadsheets to track this data. For the finance teams that have the benefit of a connected cloud-based system, they will be able to answer important questions like that accurately in a matter of seconds.
What’s ironic is that the forecasts that we typically used in the past really gave an overview of past events. After all, CFOs were limited with static spreadsheets and had to use past data to predict future growth and trends. Not only was this flawed because the data was aged or inaccurate, but it also relied too heavily on having the right formulas. By connecting the front office to the back office data, you will be able to get a lot more information to base forecasting on. This will allow you to get much more accurate forecasting and you will have a lot better analysis that is based on real-time data allowing a CFO to make better decisions for the business as a whole.