Top tips for highly effective financial leadership – Xavier Consultants

Financial leadership: understanding the ripple effect

Financial leadership is much more than just keeping the books in order—it’s about guiding the entire organization toward achieving its goals through wise financial management. It plays a pivotal role because every decision made by financial leaders can significantly influence the company’s future.

Consider how even small decisions have the power to affect the entire organization. For instance, choosing to slightly decrease the budget for customer support might help meet short-term financial targets, but it could lead to a drop in customer satisfaction and loyalty, which in turn could harm the company’s reputation and revenues in the long run. Similarly, a small investment in a new project management tool might not seem like a big deal at first, but if it improves team efficiency, it can lead to significant savings and more successful projects down the line.

In both cases, these decisions ripple through the organization, affecting not just the financial balance but also employee morale, customer perceptions, and ultimately, the company’s market position. This is why financial leadership is so critical; it’s about seeing beyond the numbers and understanding how financial choices will play out in every corner of the company. Effective financial leaders look at the big picture and make decisions that will not only solve today’s problems but also pave the way for tomorrow’s successes.

With this in mind, let’s dive into practical, expert-backed tips from seasoned finance leaders.

Top tips for becoming a highly effective finance leader

Whether you’re looking to refine your financial strategies or elevate your team’s performance, these tips will provide valuable guidance for taking your financial leadership to the next level.

1. Invest in solid, reliable FP&A software.

Ensuring that everyone from the CEO down can rely on accurate figures is crucial for driving the business forward confidently. That’s why investing in solid, reliable FP&A software is a critical step for any finance leader. 

When data is scattered and inconsistent, it creates confusion and poses a serious risk to your company’s strategic direction. The right FP&A software ensures that financial data is organized and trustworthy, which is essential for making informed decisions.

“When I joined Smart City, our CEO didn’t trust our financial data, which was all cobbled together in disparate Google Sheets. Disorganized data was scary enough on its own, but the real fear came from the risk of basing strategic decisions on numbers that might be off.

The thought of risking the company’s future kept me up at night. So, I began researching consolidated financial management systems. This transition wasn’t just about adopting new FP&A software, but was a step towards re-establishing confidence in our numbers. Through this experience, I learned something: solid, reliable financial infrastructure is a necessity, not a luxury. It supports every strategic move we make. Now, stakeholders (including the CEO) can trust the numbers—and I can trust that we’re making smart financial decisions.”

— Dustin Walsted, VP of Finance at Smart City

2. Build out your reporting infrastructure at a granular level.

Detailed and granular reporting is key for any business looking to stay agile and responsive. By drilling down to the finer details, you can better adapt to changes in the business environment and maintain strong, credible relationships with partners. This approach keeps everyone on the same page and ensures that strategic adjustments are based on comprehensive and up-to-date information.

“As much as possible, build out your reporting infrastructure at a granular level. Businesses often change targets, reporting structures and focus areas, and having the data at a low level allows you to reorganize your reporting and adapt without losing a step—and more importantly, while maintaining credibility with your business partners by having accurate and timely information.

This year, we’re focusing on adding additional dimensions to our reporting—moving from business unit P&L down to customer level P&L to give leadership more insights into our most profitable and efficient business.”

— Ben Cohn, Manager of FP&A at Loadsmart

3. Start the budgeting process early.

Starting the budgeting process early is crucial for effective financial leadership because it provides the time needed to address and incorporate feedback from various stakeholders. 

By setting clear timelines well in advance, you can avoid the rush and reduce errors, making the financial management process smoother and more reliable.

“My biggest tip is to start the budgeting process early and create an organized timeline in advance. At Edge Fitness, we have multiple iterations of our budget process for the new year—we have version one that we completed already, we just completed a version two, and we’re planning to do a version three.

The FP&A team is always balancing multiple projects, so the earlier you have that timeline, the sooner and more easily you’re able to interact with different business owners, get feedback on a consistent basis, and make everybody more aware of what’s going on in the budgeting process.”

— Ethan Kutner, Director of FP&A at Edge Fitness Clubs

4. Don’t forget to delegate.

Delegation is a powerful tool for finance leaders striving to enhance their effectiveness. By assigning responsibilities to team members, you can concentrate on broader strategic issues that demand your direct attention.

“When it comes to managing demanding schedules, effective delegation is key. As finance leaders, it’s crucial to identify tasks that don’t need our direct involvement.

When delegating, make sure your team understands not just what needs to be done, but also why it’s important. This clarity helps them see their role in the bigger picture of your financial strategy. You should also give them the autonomy to make decisions within their tasks. This not only frees up time for you to focus on high-level strategic decisions, but also fosters skill development and confidence in your team.”

— Christina Ross, 3x CFO turned CEO of Cube

5. Align financial plans with broader business objectives.

Ensuring that financial plans and broader business objectives are closely aligned is crucial for any finance leader looking to effectively guide their company. 

This alignment allows you to make strategic decisions that directly contribute to the company’s goals, avoiding wasted resources and missed opportunities. It’s about making sure every dollar spent (or saved) plays a part in driving the business forward, whether it’s through growth or strategic contraction.

“Aligning financial plans with the broader business objectives is a key step in becoming a driver of business strategy, but it is sometimes overlooked. As finance leaders, we need to ensure that our financial investments directly support upcoming business goals.

For example, the business might grow or contract by about 20% in the next year, but this doesn’t necessarily apply uniformly across all departments. Our role in strategically driving the business involves making informed decisions about where to invest or divest, focusing on areas that align with our overall strategy. This helps us avoid over-investment in areas that don’t contribute to the main objectives.”

— Ryan Fanter, VP, Strategic Finance at Figment

6. Under-promise and over-deliver.

By setting more conservative expectations initially, you can manage resources wisely and provide room for dealing with unforeseen challenges, leading to more consistent success and strengthened trust within the organization.

“Unforeseen events are a given, whether it’s a personal matter or a last-minute request from a board member. Building in a buffer for your internal deadlines can give you the extra time needed to handle these surprises without missing your overall timelines.

Early on in my career, I received a piece of advice that’s stuck with me: Under-promise and over-deliver. Overcommitting without allowing some leeway for you and your team often leads to trouble.”

— Julia Coto, CFO at ChartSpan Medical Technologies

Conclusion: lead with confidence

Remember, the best financial leaders are those who not only manage budgets but also drive their organizations towards growth and stability through strategic decision-making. Embrace these tips, and watch as your financial leadership transforms not just your finance function but the entire trajectory of your company.

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