CFO’s Don’t Make Decisions Based on Cost

The CFO job is a tough one. There are a plethora of ideas that need to get funded…and most are very good ideas. How do CFO’s make critical decisions in their organizations? The common mistake is thinking is that a CFO will make decisions on cost. The truth is that a good CFO will never make a decision based on cost but will make decisions on value. This means that if the idea proposed offers value to the organization, CFO will find the money to fund the cost. What are some things that the CFO will value? These include ideas that:

  • Will support a stronger financial position for the organization
  • Will help the organization fund and support the strategy of the organization
  • Will promote healthy collaboration and improve communications in the organization
  • Will improve efficiency and effectiveness and reduce overall human capital resources in the organization (even outside of finance)
  • Will lessen the chance of error in the organization
  • Has proven to work in other peer organizations
  • Prove that doing nothing is riskier than implementing the proposed idea
  • Will move the organization toward an established trend
  • Will eliminate risk to finance or the organization as a whole

When promoting ideas to CFO’s it is important to focus on the value or the benefit to the total organization of the idea and not to simply focus on the cost. After value is established, then the CFO will ask: “So, what will this cost?”. If the price is not outrageous and risky, value will always supersede price in the CFO’s decision process.

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