A decade ago, the Chief Financial Officer was expected to simply oversee the financial aspect of a business. Today, however, the typical real estate CFO is expected to handle so much more that he or she essentially takes on a whole new role at his or her business: overseer of all company operations.
What’s driving the change? The rollouts of requirements and regulations such as the Dodd-Frank Act and the IFRS have changed the rules around accountability and transparency across financial services, particularly in relation to capital funding and new reporting requirements. CFOs now have more of a personal stake in, and accountability for, regulatory adherence and compliance. They invest more personal resources dealing with regulatory matters and engaging policy makers to ensure that new regulatory requirements benefit the business. As a result, they need to not just provide financial reports to the board, but play an active role in business strategy to assess the impact of decisions and provide specialist expertise to resolve regulatory challenges.
While real estate CFOs don’t necessarily drive innovation, they must recognize the value in supporting an ever more complex business. If one thinks of a company like a school, then new regulations, technology, and the changing economy have pushed the CFO into the role of a dean and educator.
How the role of the real estate CFO has changed
Traditionally, the Chief Financial Officer was responsible for bringing value to the company by focusing on specific accounting aspects of the business. These responsibilities took shape in how the CFO supervised and managed financial work and investments, analyzed expenses, and tracked regulatory changes. However, according to an Ernst & Young 2016 report, almost 70% of CFOs say that they are spending more time now than they were five years ago communicating their organizations’ progress on strategic goals to stakeholders.
The traditional roles are no longer enough. Because of the increased pressure on financial offices, a CFO’s responsibilities today have a broader influence across the business, with an emphasis on three main areas:
- Technological leadership. Keeping up with the most recent technological developments in the industry can help CFOs identify tools that might help their companies comply with financial regulations and requirements in the most efficient way. Familiarity with cloud solutions, particularly cloud ERP systems and how they can benefit a company’s operations, is now crucial for the office of finance.
- Corporate strategy. To keep up with regulation compliance and investor demand, CFOs are starting to find themselves leading corporate strategy and influencing tech strategy to move the business forward. Taking the lead on strategic development results in a new kind of efficiency between finance and strategy, and CFOs who understand what’s behind the numbers will serve as valuable strategic partners for the organization.
- Data analysis. The finance and accounting office has become the keeper of the data for today’s organizations. Not only does data converge under the office of the CFO, but so do the systems that are used to collect and distribute it. As a result, CFOs are now more involved in evaluating technology solutions related to big data and mapping the flow of information across the organization. In addition, the CFO also needs to have the ability to report this data and its implications to investors in a clear way.
Learn more about the changing roles in the office of the CFO in this video and take a deep dive into the specifics of the CFO’s new responsibilities.