A CFO Perspective on Business Model and Industry

Nov 2, 2020

Contrary to the traditional image of the CFO as a penny-pinching bean counter, today’s CFOs are business partners and counselors to the CEO, who help guide and influence decision making using financial and economic context as drivers of such choices. A CFO must have a clear and complete understanding of their company’s operations, supply chain, and various other factors contributing to a company’s success. We often refer to CFOs as being businesspeople who happen to have strong financial capabilities.

Finance Must Be Embedded Throughout a Company

CFOs should possess a strong understanding of the company’s business model and the industry in which it operates. They should be capable both through technical experience and communication skills to use this knowledge to provide insight that enhances commercial and operations management teams’ decision-making. Central to their input is ensuring there are sufficient finances in place and available to execute strategies pursued.

Finance must be an integral component of decision support to essential functions, including commercial, operations, manufacturing, and distribution. All departments in an organization need to communicate with and receive input from finance regularly. Finance should provide information to the design, modification, analysis, and support of the business’s most essential functions. This process offers more insight into the measurements of operational success and creates greater accountability and direction. For finance to be a valuable contributor to this process, finance must understand how the business is designed and operates.

In KPMG’s survey, The View from the Top, 45% of CEOs voiced concerns with their CFOs lacking commercial (i.e., non-financial) experience and knowledge. Key areas of expertise and understanding that are important to today’s CFO role are:

• Having a breadth of finance experience, especially in positions that offer exposure to the business’s commercial and operations functions. Depending on the company and industry’s nature, it may be advantageous to accept roles outside of the finance function.

• Possessing a global perspective through international exposure in both established and emerging markets. This experience can help you manage through the volatility and complexity associated with various regions of the world, as well as opportunities, challenges, and competition from overseas.

• Looking continuously for leadership opportunities and pursuing team-building skills through transformation initiatives and effective change programs. This experience promotes the development of communication skills and influencing skills necessary for dealing/negotiating with both internal and external stakeholders. As a central point of interaction for units throughout the company, the CFO should not only maintain clear lines of communication to all the company’s function units but also facilitate understanding between the diverse units.

Supply Chain

A supply chain is a network between a company, its suppliers, and in some cases, its customers, to produce and distribute a specific product to the final buyer. This network includes different activities, people, entities, information, and resources. The supply chain also represents the steps it takes to get the product or service from its beginning state to the final customer.

Companies develop supply chains to reduce costs and remain competitive in the business landscape. Supply Chain Management is crucial because an optimized supply chain results in lower costs and a faster production cycle.

The most effective CFOs understand the supply chain involved with their company and become partners with the leaders responsible for all aspects of the supply chain. When companies engage in cost containment or cost reduction strategies, the supply chain perspective is vital for analyzing savings and efficiency. When companies seek to expand their operations most effectively and efficiently, finance becomes a crucial part of seeking opportunities throughout the supply chain

CFOs and supply chain leaders must work together to understand, analyze, and address supply chain issues. In companies where business-partnering is central to the culture, CFOs bring their unique perspective to solve business problems and provide insights into informed decision-making

Together, CFOs and supply chain leaders create alignment between strategy, finance, tax, and operations, unlocking hidden value within the organization.

Questions to consider for your organization:


Does the CFO participate in strategic design changes to the business model?


Does the CFO work closely with the supply chain leaders in your organization?


Has finance assigned specific responsibility of leadership to each of the critical operations of the company? Do these finance professionals have a dotted-line reporting to finance and operations, or do they work independently?


Are communications channels well-established and frequently used between decentralized functions?

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