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The Middle Market CFO: Moving From Functional Excellence to Strategic Partner

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Middle Market Chief Financial Officers have a lot on their plate in today’s environment. The increasing regulatory environment, income tax complexity, internal needs for decision/issue analysis, cash flow management, increasing speed of change in the business environment, etc. etc. The focus on the whirlwind of day to day demands can create a mindset and approach of what I call “Functional Excellence”.

Functional Excellence is an approach of being a great CFO, keeping under control all the complexity that he or she is responsible for and optimizing the outcomes. This includes:

• Cash management – forecasting and managing cash flow
• Internal controls – preventing potential transactional issues
• Financial reporting – accuracy, timeliness, and relevance
• Income tax planning & compliance
• Budgeting – annual process coupled with monitoring spending compliance & cost management
• Risk management – Insurance, benefit programs, etc.
• Information systems
• Operations support – analysis and problem resolution

But, middle market companies cannot afford to just get Functional Excellence from a good CFO. They need much more. They need the CFO to be a “Strategic Partner” for the business, driving value and change.

The CFO, as a Strategic Partner, can add tremendous value in the following ways:
• Unbundling value drivers – identifying, monitoring, and using to formulate forward strategy
• Staying ahead of the change curve – creating a dashboard including leading indicators. Identify future changes before they occur and cause proactive action.
• Looking strategically at the business model – identifying necessary changes to stay ahead of the competition
• Armed with the above information, becoming a strategic planning partner to the CEO and management team, helping to determine the right combination of strategies and initiatives to achieve the long-term vision.
• Becoming a catalyst for change, helping to drive organizational execution of strategic initiatives

Just like CEO’s, CFO’s need to find time to work on the business, not just in the business. Getting out and thoroughly understanding the issues in each team within the company, building and maintaining internal relationships. Building external relationships. Staying current on industry and economic trends and developments. And above all, building the processes to function as a Strategic Partner. All of this revolves around the ability to see the big picture, but still roll up your sleeves and get granular.

Let me know what you think. Leave your comments and recommendations.

Contact me if you would like to discuss how this approach can benefit your company.

Mike Hutson
Managing Director
Edge Financial Strategies, LLC.
mhutson@EdgeFinancialStrategies.com
www.EdgeFinancialStrategies.com
 (317) 691-6811

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