What are the biggest challenges and accounting issues CFOs face, as we round out 2023 and head into the next one?
We kicked off our recent panel discussion in Dallas as a part of our CFO Leadership LIVE series with that very question, and our expert guests — Gayle Anderson, CFO of Kalkomey, LLC; Matt Thiel, CFO of Oilfield Water Logistics; and Carla Phillips, CFO of Equify, LLC — tackled it head on, sharing their insights on everything from talent to technology and beyond. If you couldn't join us for our quarterly finance leadership lunch and learn, here's what you missed:
Talent, Technology and Transition top the List of CFO Challenges & Accounting Issues
Heading into 2024, many CFOs are still feeling the impact of 2020 acutely. Rapid change, return-to-work reorgs and a lean talent market have all kept finance leaders on their toes. "It's really all about trying to smooth out those peaks and valleys in the capital process," Thiel said, drawing a comparison between the cyclical nature of the oil and gas industry he navigates every day with the industry-agnostic shake up caused by Covid-19.
It's this aspect of the CFO role that requires them to captain their ships as steadily as possible on choppy waters has shone a spotlight the need for a winning dual talent and technology strategy. "There's a lot of technology challenges that come with [change]. Some people adapt really well, " Anderson said, "but not everyone does, and you have to either help them along or help them figure out that this maybe isn't the path for them — it's a huge task."
The CFO's Job Description is Changing, and it Comes with a Longer To-do List
In 2022, the line between CFO and COO or CIO is blurring, while the need act as partner to the CEO comes into sharper focus than ever before. Thiel pointed out that the novelty of modern cybersecurity threats introduced a function to the CFO role that many never even knew to prepare for just a few years ago.
"We really want to stay out in front of that, so we're getting cybersecurity implemented," he said, adding that many CFOs now have to ask, "'how do you balance [security] with the cost of that security?" Citing the growing threat of ransomware attacks — up 64 percent year-over-year between 2020 to 2021 — he urged CFOs to consider insuring against hackers. "You can't really scare yourself out of that."
Phillips seconded the importance of anticipating and preparing for future risks, calling it a CFO's job to "see around corners". She considers the events of 2020 an "incredible learning experience" reminding executive leaders to be prepared for anything, she distilled the most significant shift in the CFO role down to a question: "To me, it’s fundamental to go back to people and technology. How do I make sure that whatever comes around the corner, I'm ready for that?"
Anderson sees the modern CFO role as increasingly operational in nature, saying that today's CFOs often take on the mantle of 'Chief Collaboration Officer' and act as a kind of cross-departmental conduit. "Honestly, sometimes to CFO is only one that kind of knows what every single [department] is doing, and what their ambitions and goals are and what they're trying to achieve. So, when there's conflict, sometimes we need to come in and be that person that brings people together and says, ‘Okay let's first of all, figure out what our common objectives are' and work from there.
Phillips agreed, adding that "when you come up within accounting or finance, you have more of a bird's eye view of the organization; more than any other department head other than like a CEO or COO … I think it does lend well to other roles that. I mean like with the cybersecurity — unless you have a CTO who's it going to fall to?"
A Solid CFO/CEO Partnership Lays the Foundation for Success
Increasingly, the CFO acts as a "second-in-command" to the CEO as their role evolves. " I think a couple of things that you see if you look at job postings for CFO position, they almost always have the word 'partner'. You know, or 'partner with the CEO'," Phillips said.
Anderson, who spent nearly a year acting as interim CEO earlier in her career, agrees. "Honestly, [the time I spent as] CEO helped me become a better CFO. I used what I learned about our products and technology and customer experiences to help our executive team and our CEO make better decisions and frankly, work together better."
To build that partnership, Thiel says, CFOs have to start with a solid foundation. "Like any relationship, it just revolves around trust, right? You have to trust that you have the best interest of the organization at heart, that you're setting [them] up for success." When CFOs can establish trust with their CEO, he says, both leaders feel empowered to speak freely, provide guidance, push back when necessary and receive criticism without causing offense.
In a Post-pandemic Remote Work World, CFOs Have to Think Outside of the Box to Attract Talent
Most finance leaders can agree that it's been challenging to find, hire and keep qualified accounting challenge — and that it hasn't gotten easier in the post-pandemic landscape. All three of our panelists agreed that the shift to remote work during the pandemic has changed the game, likely permanently.
From Thiel's perspective, that can make hiring and retention difficult, thanks to a sense of detachment that can develop for employees when they're approached with an enticing offer. "There's a sense of loyalty or investment that comes from sitting next to someone and working with them and learning from then, and the remote environment had removed a lot of that personal aspect," he observed.
Phillips recognized aspects of her own challenges in Thiel's perspective, echoing the sentiment: "We lost a few people early on [in return-to-work efforts], and I think it was very much due to going back to the office."
Thiel's company has taken a hybrid approach, while Phillips' team is working completely in-person, but for both, the solution to challenges remote working presents is the same: building a strong, engaging culture for employees. "We've done a lot of cross-training," Thiel explained, "so that [teammates] have to talk to each other, but it's in a functional way and not just 'okay, everybody get on a Zoom call and grab a glass of wine at five o'clock and let's stair at each other for an hour.' We're asking, 'how do we learn from each other and grow'?"
For Phillips, a strong culture that includes one-on-one coaching in an environment that rewards collaboration and empowers innovation has made it possible to retain employees without offering a remote work environment and found the silver lining to early attrition & accounting issues when the policy was announced. "We have to work extra hard and have something that attracts them to the situation, and that's just the reality of it. Some people won't interview, but that's fine — we would just be wasting their time and ours and it's not going to be a fit.
A Winning Technology Strategy Focuses on People to Tackle Accounting Issues
To realize the investments they make in implementing and upgrading technology in the finance function were most successful, our CFO panelists told us, when they were made to benefit both the organization and the people within it. For Phillips, who was implementing a new underwriting and credit approval system to optimize back-office finance alongside a much-needed upgrade elsewhere, this meant staying focused on a north star.
"Our goal is to have [our team] working at their highest level and getting rid of the menial stuff. I don't mind just hiring, but I don't want to just throw bodies at the problem. We have a solid culture and pretty intimate work group and I want to keep that culture alive." Automating the tedium for her team has yielded better reporting and data access for Phillips, which has streamlined the process of securing capital and credit.
For Thiel, automation wasn't as useful for reporting. "We've found that we can't really automate that stuff," he said, "we've looked at it multiple times and [M&A stakeholder] requests just changed so often that we were taking a lot of time just trying to build the next report." Instead, he's focused on automating literal pipeline functions to combat accounting issues.
"If you see high pressure from one customer, it's knocking out another customer. [With automation], you don't have to get somebody out the field trying to relieve that, and the problem might not even be there by then and you've missed out on X number of dollars or revenue. We feel like having an essentialized kind of control center not only helps with that, but also the work-life balance of our of our field employees, where they're not getting alert on their phone for something at two o'clock in the morning."
CFOs are Managing Change and Volatility by Going Back to Basics
It's been an unpredictable few years, but each of our panelists felt optimistic about the future and urged the audience to rise to volatility challenges& accounting issues by going back to basics, from managing a healthy flow of cash to building credit facilities to employee recognition and incentivizing growth with profit-sharing. Ultimately, CFOs can prepare for and navigate through change caused by external factors they can't control by focusing on the internal factors they can.