7 Goals & Objectives Every CFO Should Have For 2023
In modern organizations, the role of the Chief Financial Officer is becoming more and more critical to the overall strategy and direction of the company.
No longer are CFOs a backseat passenger to strategy, providing insight into the financial success (or failures) of the previous period and then stepping out.
Today’s CFO is intimately involved in strategizing, planning, and executing future-focused blueprints for creating financial success.
As such, it’s crucial that, as a CFO, you have several clearly defined goals and objectives to work toward.
In this guide, we’re going to explore seven examples of CFO goals. Of course, it’s important to understand that these examples are to be used as a guideline for crafting your own objectives relevant to your specific circumstances and needs.
First, let’s set some ground rules for defining CFO goals and objectives.
Guidelines For CFO Goal-Setting
Effective CFO goals use a pre-defined framework that ensures objectives are reasonable, measurable, and specific.
The SMART goal framework is a good choice for this. Setting SMART goals involves defining the objective across five criteria:
- S – Specific
- M – Measurable
- A – Attainable
- R – Relevant
- T – Timebound
Let’s work through this with an example.
Most CFOs want their finance team to be more efficient, but simply saying, “I will help my company be more efficient,” is not a good SMART goal.
First of all, it’s not specific. What do we mean by “more efficient”? What specific process do we want to make efficient?
Secondly, it isn’t measurable. How will we determine whether or not we’ve made our company more efficient?
Changing our goal to “Reduce our month-end close process from 12 days to 10 days” is both specific and measurable.
Next, we need to determine whether the goal is attainable and relevant. These two factors are highly individual.
Your ability to reduce the month-end close process by two days is determined entirely by your team’s capabilities, current roadblocks, and the possibility of introducing new elements like software automation to speed up workflows.
Similarly, relevance (whether or not this smaller goal makes sense in the context of your wider organizational objectives) depends on your company goals.
Let’s assume that this goal is both attainable and relevant for your business.
Lastly, we need to ensure our goal is time-bound.
That is, by when do we need to achieve this goal?
Without setting a timeframe for meeting our objectives, we can always say, “We’re still working on it.” and never admit that, in reality, we didn’t achieve the goal.
So, we add a timeframe to the goal: “Reduce our month-end close process from 12 days to 10 days by the end of Q2.”
SMART Goals And OKRs
Many organizations (particularly large ones) use the OKR approach to measure the effectiveness of a CFO.
OKR stands for objectives and key results.
That means that each goal has a primary objective that is accompanied by two or three specifically measurable key results that act as steps to take along the way and tell us if the objective has been achieved.
There is some overlap between these two frameworks, though the OKR approach is generally more detailed from the perspective of metrics.
You may choose to use one or the other, or combine the two frameworks for a super detailed objective-setting approach.
For example, we can take our SMART goal from above (Reduce our month-end close process from 12 days to 10 days by the end of quarter 2) and draw out a few key results:
- Identify three manual processes that can be automated
- Provide additional training to relevant finance team members
- Integrate our CRM and accounts payable platforms for a real-time data sync
Make sense? Great. Let’s look at some examples of CFO goals and objectives.
1. Increase Cash Flow Velocity
Cash flow velocity is a metric that describes cash flow over time.
Say, for instance, you made $12M in positive cash flow last year. That’s $1M a month ($12m / 12 months) or $3M a quarter.
We probably don’t need to go into detail as to why this is an important goal for most CFOs.
Let’s look at making this a reasonable SMART goal, however.
It’s already specific (we are using a pre-defined metric—cash flow velocity), but we need to make it measurable:
Increase cash flow velocity by 20%.
To ensure this goal is attainable, we look at our historical data, in which we’ve been increasing cash flow velocity by 15% year-on-year. An increase of 20%, then, seems reasonably attainable since we are now putting a specific focus on it.
We’ll assume the goal is relevant (increasing cash flow is rarely irrelevant), so now we just need to make it timebound:
Increase cash flow velocity by 20% by the end of the financial year.
2. Make More Data Real Time
Real-time data is critical to obtaining an up-to-date understanding of company financials and being able to quickly mitigate identified risks or pivot strategic approaches with agility.
But real-time data doesn’t just magically appear; you need to set up the conditions for it.
This generally involves the use of software platforms like financial planning tools, as well as integrations and connections between the various systems you use to manage financial data.
Let’s turn this into a SMART goal:
- Specific. We need to define the kind of data we are talking about: Make more of our financial data real-time data.
- Measurable. We haven’t set a quantifiable metric yet: Make 80% of our financial data real-time data.
- Attainable. This depends on how much of our data is already available in real time. If it’s 0%, this might not be achievable (depending on the timeframe). Let’s assume we currently have 50% of your data up-to-date and available in real-time, making this an attainable goal.
- Relevant. Let’s assume that one of our larger organizational goals is to improve our decision-making speed, making this a relevant CFO goal.
- Timebound. We need to set a deadline for achieving this goal: Make 80% of our financial data real-time data within the upcoming quarter.
3. Link Finance To Operations
One of the key jobs an effective CFO fulfills is making financial data, reports, and plans accessible and comprehensible to the wider team.
The ability to connect finance to the day-to-day jobs of employees in every department is a vital communication skill for successful CFOs.
As such, it’s an ideal goal to work toward.
Using the OKR framework, we might commit to key results such as:
- Develop a finance communication plan
- Survey all employees to ask them about their understanding of their role’s impact on the company’s strategic financial vision
- Hold monthly meetings with the VP of each department to ensure alignment on financial vision and their team’s impact on it
4. Pay Down Debt
Debt is often a necessary part of startup growth, but is a burden nonetheless.
As such, most CFOs make it a goal to pay down debt as quickly as possible, once cash flow is at a point where this is realistic.
A SMART goal for paying down debt might look like this:
By the end of Q4, pay down 50% of our existing loan and credit card debt.
Note that this goal is:
- Specific – We have specified which debt we want to pay down.
- Measurable – We want to pay down 50% of the amount we have owing now.
- Attainable – We’ve assessed our cash flow and confirmed this is an achievable objective
- Relevant – Paying down debt is important for improving our ability to access more funding
- Timebound – We have specified that we’ll pay the debt down by the end of quarter four
5. Reduce Organizational Friction
When we talk about friction in the context of finance, we are generally referring to the ability of your department leaders to make spending decisions without the need to jump through several hoops.
Of course, we need to consider risk here, so our high-level goal should be to find the optimal balance between efficiency and risk mitigation.
We can use the OKR framework for this goal.
Starting with the primary objective (Reduce organizational friction), we can build out several key results:
- Review all purchasing policies against a risk matrix
- Investigate the feasibility of pre-loaded spending cards
- Consider whether our VP purchase approval limit can be increased
- Create an approved vendor list
- Use procurement automation software to create automated approval workflows
6. Build More Accurate Budgets
The need for accurate budgets hardly needs to be defended. It’s a goal of pretty much every CFO.
As it’s such an important goal, let’s look at it through the lens of both frameworks. First, the SMART goal approach.
Let’s make it specific and measurable: Improve the accuracy of our quarterly budgets from ±15% to ±8%.
We can assume it’s a relevant goal because ±15% variance is, generally speaking, larger than we’d like. Is it achievable, however?
Let’s assume that the company is currently working in spreadsheets for budgeting purposes (which is probably why their budgets aren’t super accurate). There’s a lot to be gained from moving over to a dedicated financial forecasting platform, so we can assume this is an attainable goal.
Lastly, we need to add a time dimension to our SMART goal: Improve the accuracy of our quarterly budgets from ±15% to ±8% by the end of quarter two.
Now, let’s use that goal as the objective for our OKR, and create 3-5 key results:
- Implement a new financial forecasting platform
- Audit historical data to understand what is causing variances
- Connect the new platform with our accounts receivable and payable tools
- Set up automated alerts when our actual reach ±5% of budget to enable preventative action
7. Mitigate Financial Risks
Similarly, risk mitigation is a crucial CFO objective.
Of course, “mitigate more risk” isn’t exactly a helpful goal. Let’s use the SMART goal framework to give us something more tangible to work toward:
- Specific: Implement new risk mitigation practices for departmental spending
- Measurable: Implement five new risk mitigation practices for departmental spending
- Attainable: Five new policies seems achievable, right?
- Relevant: I mean, when is risk mitigation not relevant?
- Timebound: Implement five new risk mitigation practices for departmental spending in quarter one of this year
Today’s CFOs are getting more and more involved in financial strategy and the overall direction of the company.
They work intimately with the CEO to build the company’s financial vision, and use powerful financial tools to help them create multiple financial scenarios, analyze financial data in real time, and create realistic plans for raising funds.
Sound like what you need?
Finmark from BILL has all of that and more. Check out how we can help you achieve your most ambitious goals and objectives as a strategic CFO, or if you’re feeling super motivated, dive right in today!
This content is presented “as is,” and is not intended to provide tax, legal or financial advice. Please consult your advisor with any questions.