The role of CFO has evolved significantly in recent years, moving well beyond the financial record keeping, reporting, and statutory compliance functions that used to define the job. While that work is still an important part of the role, today’s CFOs also have to use their knowledge and understanding of their company’s financial position to drive its strategic direction and propel the business forward.

Of course, that’s often easier said than done, particularly if you’re the CFO of a fast-growing company. These companies ask a lot of their CFOs — from strategic planning, fundraising, budgeting, and capital allocation, to hiring and managing people, managing growth, and executing and integrating acquisitions. Not only that, as CFO, you also need a comprehensive understanding of your business’s operations, excellent financial aptitude, and effective communication skills. Plus, your fellow executives, the company’s investors, and other stakeholders all expect you to keep them apprised of the business’s progress on a timely basis, including identifying opportunities for innovation, improvement, and transformation.

In this post, I outline how CFOs can bring a much needed strategic lens to the finance function to help drive their company’s — and their own — long-term success. In addition to my own ideas, this article also reflects the insights Espresso has gleaned over the past 11 years while partnering with hundreds of CFOs, as well as the input of a number of exceptional CFOs from across our network. 

Start by taking a strategic approach to internal operations

While it may sound rudimentary, as a CFO, a critical and often overlooked first step to becoming a strategic leader is having a thorough understanding of, and insight into, your company’s operations. That means being involved in hiring the best people, establishing sound business processes, and utilizing the right technology. Not only is having the right people, processes, and technology in place essential for scaling any business, understanding each, and how the business is stitched together, is critical for any CFO who wants to be an effective leader capable of driving real strategic insights.

As CFO, you play multiple roles. Most obviously — and critically — you have to have a deep understanding of your company’s liquidity so that you can serve as a gatekeeper with respect to the competing demands for capital that different business units have. Being a master at cash management is essential and the single most common thing that keeps CFOs up at night, particularly early on in a company’s growth. You’re the person responsible for the company’s bottom line, while the rest of the organization is focused on other priorities like R&D and sales and marketing, all of which cost money. Always keeping a pulse on cash and stretching every dollar give you the flexibility to ensure your business meets its strategic goals. 

But knowing how much cash there is to spend or invest is only the starting point. You can’t play an effective part in the capital allocation process without properly appreciating the operational demands of individual business units or the returns that each potential investment might offer. It’s also important to understand how those investments play into your company’s strategic vision.  

Thoroughly combining financial, operational, and strategic insights will lead to better capital allocation decisions. But the best CFOs recognize that spending and investment decisions are milestones, not endpoints. Having made or helped to make the initial decisions on budgets and planning, it’s up to you to hold business units accountable, and to ensure that their spending yields the targeted results. And, of course, it’s also important to use your experience and industry knowledge to stay on top of the benchmarks for ROI that your competitors are achieving.

Your sales team is a good example of one of the many business units you’ll need to interface closely with. While its primary focus may be generating and growing revenue, it may not be monitoring the money it spends as closely or completely as it should. And, since there’s typically considerable pressure to bring in new deals and reach quotas, heavy discounting can be widespread. 

“As CFO, you and your team not only have to focus on revenue growth, but also on the impact of spending to the bottom line,” says Arend de Jong, CFO of Sales Boomerang, a leading borrower intelligence platform for mortgage lenders. “You also recognize that pricing involves an understanding of the needs of your customers and the value that your product or service is delivering to them. For these and other reasons, it’s important to ensure that your team works closely with sales to develop strategies that yield the highest quality revenue and margin growth.” 

Make sure you’re prepared for explosive growth and financial downturns

As CFO, you’re likely going to experience good times when the company is growing exponentially, and bad times, when, say, it’s hit hard by a financial downturn. Being able to manage both ends of that spectrum, and everything in between, is critical. 

Growth will put stress on any business model and could negatively impact the ability of finance to deliver on its core transactional, reporting, and compliance responsibilities. That’s why your involvement in developing and investing in your company’s people, processes, and technology is critical to building a strong baseline infrastructure for growth and helping you ensure that that infrastructure is maintained while executing on your growth plan.  “Having an operational mindset will allow you to accurately identify discretionary spending and understand what KPIs to focus on and how to improve them,” says Sean Noonan, Consulting CFO at, a leading order management platform for sellers of digital advertising.

At the same time, understanding the limitations of your baseline infrastructure is critical to determining which areas of the business could benefit most from increased investment. For that reason, it’s important to have the numbers at your fingertips to substantiate or refute a business case for a particular investment. Even more important, you should be putting the right principles and guidelines around those investments, including defining success through measurable metrics and targets and carefully managing working capital and cash conversion. 

In a downturn, as CFO, you need to balance short-term concerns and pressures, such as managing cash, liquidity, and profitability, with a long-term vision for sustainable organizational success. When making short-term critical decisions, it’s important to step back and consider the company’s mission statement and whether those decisions still align with it. Plus, integrating non-financial value creation metrics, including customer satisfaction, employee engagement, culture, and diversity, into your corporate scorecards can help ensure there is still a focus on long-term value creation. 

This speaks to another element that’s critical to successfully executing the CFO function: being able to deal with multiple (and competing) constituencies. The points above demonstrate how the CFO bridges between the CEO and business unit heads, as well as exercising his or her own agency in terms of dealings with other managers. In addition to internal relationships, the CFO will also need to manage a great deal of the communication with the board and will be a critical touchpoint for the company’s external capital providers. Technical skills are necessary, but not sufficient. The best CFOs need to be as strong interpersonally as they are numerically literate.

Always deliver accurate and reliable forecasting and analysis

Companies are increasingly moving away from the typical annual capital-budgeting process toward a more agile one, with flexible budgets, rolling forecasts, quick decision making, and a performance-management system to match. Doing so requires key business functions to be aligned and to have constant cross-functional coordination. 

As a CFO, it’s important to be integrated as an internal advisor to the executive team and their business functions because it will give you a much deeper understanding of what’s driving your forecasts. That allows you to tie them to specific performance objectives for each of the business functions that you control and influence. 

Agile forecasting and analysis also requires quality data from all business functions to continuously improve and iterate on the budgeting process. CFOs and their teams are using digital transformation to gain better data-driven insights and more predictive forecasting. Therefore, as the CFO, it’s critical to work with your executive team to establish a strategy for governing data across the enterprise to drive these insights. 

This will likely require mapping out critical workflow processes, clearly identifying what technology is relied on throughout the workflow, developing standardized data definitions, and deploying controls in business processes, IT applications, and/or reporting where it makes the most sense. A company may have very valuable data, but it needs to have the right processes and technology in place to ensure the data is consistent across the organization and to avoid a garbage in, garbage out scenario. 

Note that a critical driver of a CFO’s success in this aspect of the role is being able to think and build ahead. Very early stage companies can get by with rudimentary tools and processes, and it’s actually common to see restricted investment in the financial function held up as a badge of honor (i.e., “We’re only spending on things that drive the business forward.”).  

But not planning and investing for the future can hold businesses back, and this is particularly true of the CFO’s office. “CFOs need to build a foundation for the future not the present,” says Enio Lazzer, CFO of Espresso Capital. “As companies scale and grow, workflow, resource requirements, and processes will need to change to accommodate that growth. Having foresight and planning for this evolution and baking both a framework and the necessary flexibility it needs into the business is paramount for ensuring they’re adequately prepared and resourced to meet future needs.” Demanding that commitment from the company often requires considerable strength of personality and resolve, on top of the technical awareness and strategic vision of what will be necessary for the company to operate on a completely different plane than it currently is, while still meeting current needs. 

Agile forecasting requires a holistic view of both key financial drivers as well as non-financial data or business levers that can be pulled on, including human resources information and sales data from a CRM. In addition, benchmarking key drivers in your forecast against industry data will give you powerful insights and confidence that your forecast is more accurate. OPEXEngine is a great benchmarking platform that compares a company to peers and market leaders, calculates variances, and shows relative performance against benchmarks. 

To drive further insight and value from budgeting and forecasting, the best CFOs are able to formulate, evaluate, and implement strategic choices that are grounded in financial metrics, but not limited to them. For example, you and your team may be better equipped than ever to assess the financial success of launching a new product or feature through data, analytics, and detailed modeling of various scenarios to help the rest of the executive team consider likely outcomes. However, CEOs and executive teams don’t have time to review excessive amounts of data, financial reports, and analytics. The best CFOs are able to summarize and interpret large amounts of data, highlight key issues and trends, and extrapolate trends that will impact the business. 

Adopt an investor mindset and link capital allocation to strategic priorities

To be an effective CFO, you need to create an environment where all of your stakeholders, including your investors, are able to understand — and are aligned on — your company’s vision and goals. As companies look to raise capital from different sources, it’s important to be mindful that investors have different investment criteria and risk-return profiles that inform their approach and ongoing assessment of their portfolio companies. It’s critical to find the right combination of capital sources, including a mix of equity capital and debt capital, and to align the specific needs and goals of the business with the right investors. For example, you should be considering the ability of the investor to provide, and the process for, follow-on investments and the speed at which they’re able to do so.

Optimizing for weighted average cost of capital is one facet of this process, but it’s not the only one. Just as important as the cost of capital are the other terms associated with it, such as operational or governance restrictions, financial covenants, and expectations. Beyond the explicit terms of each potential investment, you should also form views on the human elements of each transaction: Is this provider someone you can work with? If things go south, are you going to want to call this number or someone else’s? Again, technical skill is a prerequisite, but it’s not the only necessary quality for a successful CFO.

It’s also important to be able to communicate back to investors how the company will be disciplined in its investments. Using enhanced business reporting, including a dashboard for key financial metrics, can increase the volume and frequency of information that you make available. For example, SaaSOptics provides excellent visibility into MRR, as well as subscription management and invoicing. More importantly, it’s critical to work with the executive team and the Board to learn quickly and make decisions from those metrics. Companies are often slow to react to slowing sales and can take a few cycles to diagnose a problem and even more time to find a solution. Highlighting these types of issues early helps to ensure that investors gain more insight and can help guide decisions on capital allocation to address specific needs.

“To operationalize metrics that investors care about, it’s important to break them down into component parts that are relatable and assign measurable goals to specific departments or teams,” says Annie Rosen, CFO of Hologram, a leading global cellular platform for IoT. “At Hologram, we view the business as a mineable dataset that allows us to align the goals at the team level to the metrics that will maximize value from the perspective of an investor.”

Meeting the demands of the modern CFO

The role of a CFO at a fast-growing company goes well beyond tabulating financial results. Strong CFOs will work with managers to understand their budget needs, and with the CEO to balance those needs against their company’s resources. They’ll liaise with outside stakeholders to ensure that the business has the capital it needs to execute on its plans, and with managers and their boards with respect to accountability around investment and returns. They are responsible for the path of growth, forming strategic relationships, driving measurable value, and establishing core financial processes and reporting requirements. 

Stakeholders are increasingly looking to CFOs to be able to demonstrate their oversight of strong internal financial capabilities within the company, which are critical for growth and long-term success. Moreover, combining operational oversight with strategic insights is critical for CFOs to help the CEO, the board, and the rest of the executive team face the challenges of sustaining growth over the long term in the face of a multitude of short-term challenges.

While many companies and their CFOs employ a few of the above recommendations across their organizations, the challenge is being able to juggle all these responsibilities at once and still have time to derive real strategic insight. To do so, it’s important to outline the scope of your role clearly and to agree to it with the CEO and executive team. Doing so will help to increase their engagement with you and help you to build a reputation as an internal advisor. Moreover, putting more emphasis on your team and investing in those team members to make greater contributions not only assists their own development, it also frees up your time to focus more on strategic work.