Two ways to upgrade CFO-CTO alignment

Tax leaders and CFOs are key players in the drive to profitability and growth. But are they operating from the same playbook? 

Not always, according to a BDO report. Although 75% of finance chiefs say tax teams are consulted on business decisions before they are finalized, only 27% of tax leaders feel they are involved in a broad enough range of decisions to provide input beyond standard compliance issues. What’s more, 17% of tax leaders indicate that their recommendations carry little weight in decision-making. Clearly there’s a disconnect – one that could result in missed tax opportunities and/or heightened tax risk. 

So how can CFOs and CTOs do a better job of connecting the dots? The BDO research suggests two approaches: 

1. Tax leaders can learn to speak CFOs’ language: CTOs will want to be aware of how the finance leaders’ role is evolving as well as how finance’s strategic priorities are developing and look for ways to contribute to those goals. That means making technical tax concepts more easily comprehensible for finance chiefs, the C-suite and other business leaders. A wider range of KPIs can be helpful here. One example: metrics around tax transparency may help CFOs support their ESG (environmental, social and governance) goals. 
2. CFOs can keep the lines of communication open and provide the right support: Inviting tax’s strategic input for major decisions is important, but this request may be merely symbolic if the tax department lacks the resources needed to provide significant contributions. CFOs should work closely with indirect tax leaders to ensure they have access to the right personnel, advanced technologies (a modern tax engine, tax data analytics, edge computing functionality, etc.) and training and development to navigate today’s dynamic tax landscape. CFOs can champion tax’s role as a source of critical data, insights and knowledge for the business at large. 

When CTOs and CFOs are strategically aligned, they drive more effective decision-making and enhance performance across a broad spectrum of metrics—from strengthening corporate reputation and mitigating risk to boosting operational resilience. This alignment generates bottom-line value for the entire business.