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The strategic role of the CFO

Size matters. Mid-size companies face unique challenges. Having moved from the small and nimble start ups they once were, many still lack the resources (money and people) of big businesses.

Here the CFO has the dual role of bean counter and strategic advisor. In regards to growth and debt, the CFO in mid-size companies could well be called upon to play a more strategic role.

The strategic role, one that fosters agility and the better use of resources – cash, people as well other assets such as plant and machinery – is integral to success in this stage of the economic cycle. Central to this role is the need for timely and accurate information that enables accurate (within reason) projections of cash needs.

The CFO and management of debt is one dimension of this broader view of the role. Changing conditions will always bring challenges to a company. Consider for example a competitive threat from a larger company which may be committing increased resources in the market. Here, it is a case of managing the debt but also taking a strategic decision regarding the use of debt in the ‘field’ to respond to the competitive threat – stocking up inventory, financing marketing initiatives etc.
Initiatives from the CFO to reduce debt may not so much be a case of bringing the company into line with the realty of the economic uncertainty but more a case of running in a balanced way with strategic needs such as ensuring appropriate competitive moves or the opportunity to acquire market share from weaker competitors.

By Morris Kaplan (CFO World)

Lundi 21 Juin 2010

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