The economy is driving all contractors toward highly sophisticated financial management to survive the slowdown and succeed in the construction industry. The competitiveness in the industry is forcing decisions that border on financial insanity. Does your organization excel at financial management? Is your CFO providing economic guidance for your organization? What are crucial roles for CFOs in the construction industry?
Now more than ever, CFOs possess extensive financial skills and capabilities beneficial to the construction industry. Effectively implementing the right roles combined with exceptional performance helps contractors create a competitive advantage. CFOs are smart, hard-working and dedicated managers who have many attributes that may be leveraged through training and development. These leaders and managers set standards, provide credibility to outside parties, and interface with owners and managers with respect to the operational aspects of the business.
There are 12 key roles a CFO can play to increase asset values and mitigate liabilities, adding significant value to any contractor.
1. Business Planner and Strategist: Financial road maps and economic modeling include setting priorities to provide guidance to operational execution. The CFO must be forward thinking, particularly regarding cash flow management.
2. Score Keeper: The CFO has ultimate responsibility for timely, accurate financial reporting for both internal and external users, and the best CFOs master this responsibility.
3. Accounting Technician: The CFO must be an expert in applying generally accepted accounting principles (GAAP) that pertain to the construction industry. Financial statements are valuable only if accurately presented.
4. Systems Administrator: CFOs not only select and implement systems, but also ensure that people in the organization comply with best practices put in place.
5. Risk Manager: CFOs are proactive risk managers, constantly vigilant to avoid unnecessary liabilities. Financial management is managing risk. The CFO is often the company’s voice and, with the project team, is a key to successful project completion that meets targeted profit objectives.
6. Leader and Manager: CFOs are effective leaders and managers. Leadership and management are two different skills. Leaders set direction, align and motivate people and managers plan, organize and control the environment.
7. Communicator: CFOs who excel are great communicators. Communication skills contribute to the success of any leader or manager. The CFO needs to be able to confront difficult situations and follow through to gain understanding of the economic reality.
8. Customer Service Manager: Customer service for CFOs is easier than it appears. The right questions are “Who are my customers” and “What are their needs”? CFOs who are effective have answers to both questions and are responsive to internal and external users of financial information.
9. Educator and Trainer: CFOs who can paint clear pictures of the financial picture and communicate financial performance to nonfinancial managers are valuable assets. Over time, the balance of training and educating users creates a consistent understanding of financial practices in the contracting organization. The better the understanding, the more effective the systems and decisions that support excellent financial management practices will be in the end.
10. Technology Innovator: Because of the dollars involved, the CFO typically has substantial input, if not final authorization authority, over the selection of an IT system, or determination if an IT system needs replacement. As with most aspects of the construction industry, IT decisions are important elements of sound risk management. CFOs must understand the risks, whether they result from within the company or from outside sources.
11. Legal Compliance Officer: CFOs are part-time lawyers. Laws of some jurisdictions, if not multiple jurisdictions affect almost any action taken by a contractor. Contractors deal with income taxes, sales taxes, contract provisions, employment law, Davis-Bacon and other government contract requirements, among other laws and regulations on a daily basis. While the wise contractor consults with legal professionals, as needed, much of the day-to-day common sense application of legal requirements are left to the CFO.
12. Moral Compass Keeper: The cultural foundation for organizational ethics and internal controls is often called “tone at the top.” As a company leader, the CFO is looked upon to guide the organization with suitable values and ethics. In this position, value comes primarily from two sources, your knowledge and skills, and your integrity.
How does your CFO perform in these 12 crucial roles? If you are the CFO, what goals and action plans should you set for personal growth?
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