Be Incredible: 10 Ways for CFOs to Increase Credibility
It takes a lot of hard work and grit to earn to be called incredible. As the 2018 Winter Olympics kick off in Pyeongchang, South Korea, we’ll see many athletes perform incredible physical feats to compete for their countries. But what does it take to be called incredible as a finance leader?
For one, financial leaders carry an incredible amount of responsibility for their companies. They are responsible for understanding the company financials from top to bottom, and they’re expected to analyze that information and create an action plan with it each year. To help you be incredible at your company, we’ve put together a list of 10 ways for finance leaders to increase their credibility.
1. Be Actively Involved in Incentive Compensation Planning
Your company’s sales teams drive revenue for the company, which ultimately drives growth. It’s important that the finance team is involved in sales compensation planning from the beginning. Ultimately, you will be responsible for compensation plan modeling and cost assessment, while pushing for incentives that will drive growth and align with company goals.
2. Take Advantage of Big Data
Data has and continues to be essential to measuring and monitoring company performance. Understanding which data is most important is on of the biggest challenges CFOs face. Big data gives financial leaders better information about what’s moving through the pipeline and help improve forecasting accuracy. With analytics, you’re empowered to drive strategic change by aligning with operational functions.
3. Be Open to New Technology
As the world becomes more digital, so does the role of the financial leader. Technology is becoming more important in creating financial credibility and accuracy. Spreadsheets have always been the traditional commission tracking method, but they don’t come with the risk of errors.
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4. Consider Employee Bonuses at the Right Time
Your company’s employees play a large factor in growth, so when is it appropriate to reward them with bonuses? Incentives have been proven to improve employee engagement and motivation. While most often this relies on sales performance, ultimately, finance will have the final say in when and how much employee’ bonuses are.
5. Openly Communicate Changing Regulations
ASC 606 went into effect for U.S. public companies in December 2017, and IFRS 15 went into effect for international companies January 1, 2018. When revenue regulations are announced, they can affect every aspect of your business, which is why it’s important to openly communicate these changes with the rest of your company. To remain compliant, you’ll need to build a transition team, gather necessary data, and create an action plan for financial success.
6. Use Data to Find Strategic Opportunities
New ASC 606 regulations are requiring companies to gather more detailed financial data for commission expense reporting. While initial implementation might be time-consuming, the resulting data can provide valuable insights. Take advantage of additional data to work with sales ops to analyze incentive compensation plans and their effect on financial and company goals. Use the analysis to tweak and improve incentive plans for success.
7. Consider Company Security in Every Decision
Data security has become increasingly important as more and more financial data becomes digital. In a 2016 PwC survey, 84% of people said breaches of data privacy and ethics cause them to lose trust in companies. As a financial leader, your job is to reduce cyber security risks for your company. The best way to start is by being prepared with cyber security lessons, such as educating employees about cyber risks, signals and prevention tactics, preparedness planning, and data breach response planning.
8. Work with Sales Ops to Create Non-Financial Incentives
One of your main focuses as a financial leader is cost-effectiveness to drive growth. In many cases this can come in the form of cutting back on commissions within incentive compensation plans. However, there are other non-financial rewards to motivate and engage employees that are just as effective as a commission check. The right mix on financial and non-financial incentives will drive sales for success.
9. Align Sales and Finance
It’s been proven that aligning sales and marketing can help improve demand generation and increase the number of leads gained. The same can be said for aligning sales and finance. Aligning sales and finance helps to build incentive compensation plans that drive the right sales behaviors. Together, sales and finance can create sales compensation plans that offer reps the right amount of incentives that stays within budget and motivates sales reps to go above and beyond.
10. Understand the Impacts of Your Changing Role
The role of financial leaders, especially the CFO, is evolving. Financial leaders are becoming involved in more than just their company’s financial records. It’s important to take your changing role and use it to further company goals. CFOs are increasingly needing to be in-touch with customer needs, working with IT to incorporate new technology, and building relationships with other internal departments they haven’t before.
For financial leaders, being incredible comes with credibility and accuracy. Aligning with sales, finding the right technology, and using data insights can help increase efficiency and help you become a trusted financial leader in your company. And before you know it, you’ll be performing incredible feats and winning the gold just like Team USA!