This CFO Says Digital IQ Will Define Role in 2024

Every ship needs a navigator, particularly when the seas are choppy — even stormy.

Increasingly, the chief financial officer (CFO) has stepped up to play the navigator role within organizations, as firms big and small look to find sturdy footing in the face of changing macroeconomic conditions and an always-shifting operating environment.

“Volatility is the key word when it comes to the current macroeconomic climate,” Daryl Stemm, CFO at SmartRent, told PYMNTS for the series “A Day in the Life of a CFO.”

He said CFOs must be prepared and adaptive in such conditions, as volatility becomes a key factor in decision-making, but noted that the “primary objective” of the CFO seat hasn’t changed.

And that objective is, and will continue to be, to guide a company through its growth and to drive maximum share shareholder value through strategic decision making and resource allocation.

“If we’re lucky enough to be around doing this in 40, 50 years from now, CFOs should still be saying the same thing,” Stemm said.

However, in order to make it through the decades ahead, it’s critical that finance teams prioritize being prepared and ensuring that their processes are agile enough to weather any macro changes.

“Being prepared and being adaptive” has become increasingly crucial in the face of the landscape’s ongoing uncertainty — much more so than when macro conditions are more stable, Stemm said.

He noted that the shift to slower growth has altered the availability of resources, requiring CFOs to be more adaptable and prepared than ever before.

“I think in 2024, volatility will actually be more acute,” Stemm said.

Navigating External Uncertainty While Building Internal Trust

In a dynamic business environment marked by economic shifts and technological advancements, the role of the CFO has transformed dramatically.

Stemm emphasized the importance of CFOs fostering strong relationships with other senior leaders in the company, calling the importance of mentoring existing finance staff and accounting leaders “another CFO truism.”

As a trusted teammate, the CFO should mentor and share insights with finance and accounting teams, he said. Additionally, collaborating effectively with leaders from various departments ensures a comprehensive understanding of how financial decisions impact the overall business.

“I’m a CFO and my deepest acumen and area of expertise is around accounting and finance matters, but to expect a marketing person or an engineering leader to have that same level of financial acumen or have the same view of their impact on the company’s financial results is a mistake,” he said.

While building trust and being a valuable teammate to other executives is vital, so too is having a granular understanding of the business.

“It’s a foundational piece of doing your job to understand the business and how external forces could impact your roadmap, and how macro factors could impact your customers, so you can sell the value of your product or service to them,” Stemm said.

He added that internally, CFOs need to focus on controlling what they can, rather than attempting to control for uncertainties.

The Evolution of Digital and Automated Financial Tools

One certainty of the 21st century is that digital tools and automation are having a transformative impact on finance departments — which just a decade or two ago were bogged down by paper-based processes and long delays between the delivery of critical information.

“A perfectly legitimate historical criticism of most finance departments is [the lack of] timely delivery of information,” Stemm said, adding that innovations like artificial intelligence (AI) are already having an impact and enabling quicker decision-making.

“The enemy of both efficiency and effectiveness, not just within finance but within business, is people — if you’re relying on a person to swim through vast amounts of data and find the important bits and pieces, it’s going to take a long time to perform and be more prone to error,” he said.

Digital tools, working from human-devised parameters, are crucial to enhancing efficiency and effectiveness, and enabling more informed decision-making within finance teams, he said.

Regarding the role of emerging generative AI tools in particular, Stemm noted the opportunities they present in identifying patterns and outliers, reducing resource drains and enhancing decision-making processes.

He adds that digital investments require CFOs to liaise with other department leaders to understand their needs and best align digital solutions with broader business roadmaps.

“Everything boils down to evaluating return on investment (ROI),” he said.

Looking forward, Stemm is enthusiastic about being a change agent within his organization. He emphasized the need for CFOs and their teams to increase their digital IQ, embracing new tools and technologies.

Moreover, he looks forward to bridging the gap between finance and other departments, fostering a culture of continuous learning and collaboration, explaining that those who navigate today’s challenges with agility and foresight will contribute significantly to the success of their organizations in the years to come.