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From Controller to CFO

By Mike Whitmire, CPA; Razzak Jallow; and Greg Vecellio
December 1, 2021

The pandemic accelerated every successful organization’s need to be nimble and flexible. Companies that automated processes prior to COVID-19 were able to operate seamlessly, but other companies were forced to reinvent themselves without the benefit of timely information and insight. This sudden shift created new challenges and opportunities for corporate controllers and CFOs, who were expected to support the constant change and disruption that became the norm over the past two years.

 

Across industries, controllers and CFOs had to deal with higher demands and expanded responsibilities in shorter time frames. Controllers gain experience that’s necessary to become finance leaders, but those with aspirations to reach the CFO level must stretch themselves beyond their traditional role and skill set by becoming operational and strategic leaders as well. Some companies hire finance chiefs without an accounting background, so the competition is fiercer than ever before.

 

NEW PRESSURES FOR CONTROLLERS

 

Traditionally, the controller role has been tactical, handling the day-to-day, behind-the-scenes activities of the finance function—processing the month-end financial close and only the close. Technology that enables automation provides much-needed relief for finance and accounting teams. By adopting technologies that eliminate manual processes and shorten financial close cycles, controllers and CFOs have more time to focus on strategic planning and providing insight beyond reporting the numbers in the profit and loss statement (P&L).

 

Controllers sit at a crucial juncture—between the C-suite and the accounting team—so it’s no surprise that the pandemic impacted them professionally and personally. Controllers don’t just pay attention to the numbers; they also have to become great leaders and monitor the well-being of the team.

 

In a recent FloQast report, which surveyed more than 250 controllers and upper-level finance professionals, it was clear that automating the monthly financial close process delivers huge benefits across the accounting and finance function by speeding up operations and ensuring the accuracy of the books. Accounting workflow automation solutions aimed at impacting the month-end close increase close visibility, accuracy, and speed across a remote or hybrid team. Automation is designed to help finance teams stay on track and become more efficient even while working remotely or being down team members during part of the year.

 

The tight labor market is making it difficult to find the talent that organizations need in their accounting department. Automation also allows organizations to scale without increasing head count. While the number of many companies’ job openings has grown, the college degree pipeline is in danger of not keeping pace with the demand for finance and information technology professionals.

 

This means that many controllers and accounting teams will need to do more with fewer people. One FloQast survey respondent recommended “…finding systems to automate as many of your accounting tasks as possible, freeing up your time to manage, make decisions, and train as top priorities. You can’t do it all, so relying on technology to free up your plate should be top of mind. Everything else will fall into place.”

 

Automation can’t do everything, though, and talented, experienced controllers are valuable even in a profession increasingly transformed by technological innovation. Survey respondents found that as organizations add automation and AI, making sure the finance function has the right team members is more important than any software or process.

 

 

EMPOWER THE TEAM

 

The controller’s role is one of the most challenging in the company. The job of the controller is dynamic, with new and often unexpected issues occurring frequently. Having a strong team to share the workload is essential. Leading a team, however, also comes with the responsibility of hiring and firing.

 

A controller who responded to the survey advised that “…it’s better to switch out underperformers than to be concerned with transition and the impact on short-term workload.” Finding the right mix of talent and head count for a team means controllers shouldn’t “…underestimate staffing needs and the capabilities of current staff. Open conversations with leadership and staff are so important.” Hiring during a pandemic came with its own challenges, according to one respondent: “Onboarding and defining culture while working remotely was considerably harder than I had imagined.”

 

Not surprisingly, collaboration software platforms such as Zoom and Microsoft Teams came out on top when controllers were asked which tools were most critical to their team during the pandemic. With remote and hybrid work here to stay, 89% of controllers who responded to the survey ranked them as most important. According to one controller, “I know better now how to connect my team across continents, making the department feel as one.”

 

CONTROLLERS’ BALANCING ACT

 

While the demands on controllers have been increasing for some time, successful organizational leaders understand that being a great management accountant and finance function leader requires more than just being good with numbers. The best management accountants understand the rules that govern what they do, guidance from the business, and how to apply technological innovations and better operational processes to make the organization run more efficiently.

 

Depending on the size of the company and its leadership structure, there are likely many opportunities to be more hands-on and evolve the role of the controller to become more involved in financial planning and analysis, treasury, tax management, and information systems, among other functions. See “How Controllers Provide Increased Value” for more on this.

 

The controller is a vital role that balances various responsibilities. As the role of the controller shifts from being a steward of resources to a contributor of strategic insights and a catalyst for change, technology is helping controllers embrace those bigger demands. One controller delighted in how dynamic the role has become: “I love the reach of this position and how many more resources are available today to effectively manage responsibilities than when I started!”

 

To lead such wide-ranging activities, controllers must have a growth mindset and focus on organizational strategy. While some controllers and enterprises are content to keep the controller role the same as it was pre-pandemic and before the era of digitization, organizations that adopt a new way of thinking about the controller role will likely see greater success in operations and their bottom line. Increasingly, organizations are filling CFO roles from nonaccounting backgrounds, which has created a much more competitive market for controllers looking to rise to the CFO level.

 

 

THE EVOLUTION OF THE CFO

 

Just as the controller role is evolving, finance professionals must stay on top of the trends that are transforming the CFO role. Traditionally, the CFO’s primary roles were preserving the assets of the organization by minimizing risk, getting the books right, and running an efficient and effective finance operation.

 

The CFO role has really evolved over the last 20 to 30 years. Thirty years ago, the CFO and finance team were responsible for ensuring that the P&L was right and were viewed as “budget cops” from whom it’s necessary to seek approval. Twenty years ago, the CFO started to communicate the company’s value proposition and strategic vision to investors to raise money and rounds of financing. Ten years ago, CEOs looked for CFOs who could articulate the lifetime value of a customer and other metrics to forecast potential business outcomes 10 years out, but their role was still primarily limited to finance.

 

In the last five years or so, CFOs have become business partners with other senior executives, such as the chief information officer, chief marketing officer, chief operating officer, and other business unit leaders. This is due in part to the need to link nonfinancial metrics to the P&L and be able to pinpoint when the revenue will come in. Additionally, CFOs have had to shift their focus to enterprise-wide performance, growth initiatives, and business transformation, making it increasingly important for CFOs to be strategists.

 

THE 2022 CFO PIVOT

 

A controller should strive to add to their skill set to make them a potential candidate to become a CFO. Once they’ve attained that promotion, in order to step up to the challenge of performing at a strategic level, CFOs have to reimagine how they view their role and their team. Even prior to the COVID-19 pandemic, CFOs could lag relative to other functional areas in terms of how they evaluated employees. CFOs judged their employees based on how long they were at the office or how hard they seemed to work. Now, especially since the pandemic forced many to work from home, CFOs have had to rely on performance data to evaluate their teams. Ensuring that their team consists of top talent, is productive, and feels valued at the organization will help today’s CFOs focus on new priorities.

 

 

To act as catalysts for change, CFOs must instill a financial approach and mindset throughout the organization to help other parts of the business perform better. The CFO needs to be viewed as an integral part of top management at the company, making an endorsement from the CEO crucial. Additionally, to make the shift from reporting to helping shape the overall strategy and direction of the enterprise, CFOs need the following skills, some of which aren’t necessarily finance-related:

  • Business perspective, change and conflict management, organizational agility, and facilitation
  • Strong communication and change management skills
  • Strong leadership and business partnering skills
  • An ability to create a culture of risk intelligence to manage risk while executing business strategies
  • Understanding of key performance measurements to measure the success of strategic and operating initiatives

 

Successful CFOs bring far more than financial expertise to their organization. They’re effective leaders, data analysts, and strategic planners.

 

STEP OUTSIDE THE BOX

 

Organizations are looking for the CFO to provide leadership based on the numbers, rather than focusing solely on the numbers. The ability to understand valuable, relevant data and provide guidance to the organization is imperative for a CFO. The result is increased efficiency, new ways to go to market that are aligned with customer needs, and an ability to make decisions and organizational changes quickly, rather than needing years to roll out a new initiative.

 

These aren’t skills that controllers have traditionally learned in their education or even on the job. While management accounting and finance professionals, including controllers, are used to ongoing education, in most cases, that education doesn’t include the nonfinance experience needed. By stretching themselves and taking on projects on the business side of the enterprise, controllers can gain the skill sets necessary to rise up in the organization. There are several ways to gain the experience, including:

 

Being proactive. Accounting can be very “in the weeds.” Leveraging insights into the numbers and looking beyond them to understand the bigger picture and the company’s business goals is imperative for anyone looking to take on the CFO role.

 

Listening. Having a great relationship with the sales department creates a powerful internal collaboration that results in better processes, more profitable deals, and compensation plans that align with business goals. Given finance’s historical role of being the “no” people in an organization, it’s even more important for CFOs to listen to the heads of other departments and be flexible, assuming that no ethical lines are being crossed and no unnecessary risks are being taken.

 

Engaging. Understanding how sales goes to market and working together with the business development team to create contracts that work for both the business and customers are key to long-term profitability. The finance and sales relationships should be isolated to the leadership level. Controllers and CFOs can provide immense value to sales executives down the line with customer profitability insights.

 

“BUDGET COPS” NO MORE

 

Gone are the days of the controller and CFO being the “no” people of the organization. The new environment of fast-paced change and unpredictable disruptions to business models make evolving the controller and CFO roles even more crucial to the organization’s success. By adopting technology that lightens the manual workload, today’s finance leaders can:

  • Provide business insight to sales and operations on customer profitability;
  • Predict the total value of each customer for the ­organization;
  • Assist product development based on customers’ desired features and capabilities;
  • Work with the chief information officer to determine if the current tech stack is the optimal one for the business;
  • Represent the company to the board of directors and investors; and
  • Act as a liaison between departments and operationalize processes to create desired results.

 

Having a system where personnel can have insights from multiple functions and teams in one place is critical. Adding financial data to other operational data can be particularly impactful when brought back to the business and contextualized. One example of the benefit derived from this kind of analysis is creating new compensation plans in order to change business behavior by sales and operations teams. In another example, CFOs and controllers work jointly with sales to redesign contracts to optimize profitability per customer.

 

IT’S ABOUT MORE THAN THE BOOKS

 

Today, technology enables the close process to be dramatically shortened. In addition to speeding up the process and ensuring its accuracy, we’ve identified three additional benefits:

 

  1. Making people’s lives better. Anything that can be done to make the closing process easier, shorter, and less painful is a positive step.

 

  1. Allowing the finance team to spend more time on strategic projects, beyond the close. Controllers who want to make the leap to CFO have to demonstrate their ability to influence the business and have a great productive team. One definitive way to show that ability is to harness the power of technology to gain business insights beyond the raw numbers. By doing so, controllers can leverage that information to influence the business and how it performs. For instance, finance knows every customer’s contracts better than anyone else at the company. It can bring the insights that it’s seeing in its financial reporting and use them to operationalize for better revenue results.

 

  1. Enabling controllers to hire better talent. Given that talent is the critical component of any successful business, automating financial reporting results in greater retention rates. Arduous and painful close processes inhibit hiring top talent and cause burnout and turnover in the finance department.

 

Not only do these solutions boost productivity, but when leveraged properly, the insights from the finance function can also be applied to all functional areas of an organization. This creates a major opportunity for controllers and other management accountants and finance leadership to boost their existing skills and acquire new ones. In order to make the leap to CFO, controllers have to demonstrate the ability to influence the organization’s performance and strategy, and that depends greatly on having a stellar, productive team.

 

STEPPING UP

 

One startling result from the tumultuous year 2020 is that COVID-19 made us stronger. In fact, 40% of controllers surveyed said that they used their experiences working remotely to drive a faster close than before the pandemic. They’re quickly adopting a remote or hybrid model that allows for better work-life balance and higher productivity. Communication and collaboration tools have become essential for working with a remote or hybrid team, while close management tools make the all-important month-end process smoother.

 

The coming years will continue to redefine the controllership and CFO roles. We don’t know what unknowns are in store for business, but with the right people and information systems, organizations can predict and quickly respond to market changes. This is the best time in history to be a controller or CFO. Thanks to an explosion of technology available to finance and accounting professionals, the jobs are more challenging, dynamic, and strategic than ever.

 

The finance function will continue to be able to demonstrate its value in every organization by providing insights and guidance that go beyond the numbers. If you’re interested in impacting the business from within the finance organization, now is the time to take on new challenges and learn new skills. You’re in a unique position to drive real value and innovation for your organization, as well as further your own career.

 

Mike Whitmire, CPA, is the CEO of FloQast, an accounting software vendor specializing in close management. You can reach him at mw@floqast.com.
Razzak Jallow is the CFO of FloQast. You can reach him at rj@floqast.com.
Greg Vecellio is the controller of FloQast. You can reach him at gv@floqast.com.  
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