Finance directors (FD) and CEOs work closely together, so much so that the FD-CEO relationship can be described as the fulcrum on which the business revolves.
This dynamic relationship is important at the best of times, but it becomes especially critical during periods of uncertainty or change, as leadership teams navigate complex challenges and make strategic decisions.
In this blog, we explore why this key relationship is particularly important during times of disruption and transition.
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Periods of significant uncertainty can create a vacuum in which the leadership teams of early-stage and growing entrepreneurial businesses must steer the company through uncharted and often challenging territory.
As a natural consequence, the relationship between the Finance Director and the CEO, an integral partnership within any business, can come under immense pressure.
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How can the FD support the CEO?
A successful FD-CEO relationship provides stability, direction and clarity, and its positive impact is felt throughout the organisation. The Finance Director contributes to this dynamic partnership in a number of key ways:
- Business-wide influence: Brings commercial gravitas and engages teams across the business, allowing the CEO to focus on strategic vision and leadership.
- Complementary strengths: Adapts to complement the CEO’s flair and creativity with pragmatism and structure.
- Trusted sounding board: Offers reassurance and a second perspective. After all, two heads are better than one.
- Constructive challenge: Has the confidence and conviction to respectfully challenge the CEO when needed, helping to ensure balanced decision-making.
- Financial discipline: Implements rigour in financial processes and scrutinises the numbers to ensure accuracy and accountability.
- Risk and compliance: Flags potential financial, regulatory and compliance issues before they escalate.
- Fundraising leadership: Plays a lead role in raising capital and managing investor relationships.
In times of crisis or uncertainty, the FD’s role becomes even more critical, often adding value in ways that may not be immediately visible during calmer periods.
An FD adds considerable value to the relationship during a crisis
The strength of the FD-CEO relationship is especially valuable during challenging periods. A well-established partnership allows the FD to step up and support the business when it matters most:
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- Building on strong relationships: Using the trust and connection developed with the CEO and stakeholders to help guide the business through challenges.
- Making the most of resources: Identifying key costs and commercial drivers, using current resources wisely, and finding new funding options, letting the CEO focus on growth and innovation.
- Managing important contacts: Handling relationships with banks (for loans), lawyers (for contracts), suppliers (to prioritise key partners) and investors (to secure funds).
- Giving clear advice: Providing honest, data-based insights and financial forecasts so the CEO can make confident decisions.
- Planning ahead: Spotting potential problems early by reviewing strategies, talking to stakeholders, setting clear goals and improving systems.
- Keeping information flowing: Making sure the CEO gets accurate and timely financial information to focus on bigger business priorities.
- Adjusting to industry pressures: Strengthening the partnership even more in industries facing greater challenges.
What makes this partnership so important during difficult times is that it ensures accurate and reliable information keeps flowing, allowing the CEO to focus on other key parts of the business.
If a business is in an industry facing extra pressure, this relationship becomes even more crucial.
Fractional CFOs bring the ability to adapt quickly and help manage challenges such as cash flow issues and and funding difficulties.
At iFD, our fractional CFOs can step in quickly on an interim or fractional basis, supported by a full outsourced accounting and HR team, to provide clear strategy, direction and leadership whenever it is needed most.
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