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CFO Challenges and Priorities

by kickiong

In a enterprise local weather radically altered by each digital transformation and main disruptors such because the COVID-19 novel coronavirus pandemic, firms who wish to compete, develop, and innovate successfully want each flexibility and resilience. Securing aggressive benefit means mastering rising applied sciences and growing methods that incorporate threat administration, data-driven choice making, and a collaborative, agile strategy.

For chief monetary officers (CFOs), this want is much more pressing. As procurement and monetary departments take heart stage in crafting the strategic enterprise fashions essential to compete in at present’s economic system, at present’s CFOs are tasked with discovering methods to attenuate threat, maximize efficiency, and defend enterprise continuity whereas sustaining enough flexibility to take full benefit of rising alternatives.

At this time’s CFO Challenges Are Larger Than Ever

Up to now, the CFO served largely as a finance chief. They had been a liaison between the finance crew (together with procurement) and higher administration within the C-suite. They centered the lion’s share of their time and ability set on coping with regulatory points, guiding their groups in chopping prices, managing money circulation, and imposing budgeting initiatives, after which reporting the outcomes.

However within the age of digital transformation, the position of the CFO is quickly evolving. They don’t simply lead the finance crew or spearhead initiatives to cut back prices. As a substitute, an increasing number of firms are elevating the CFO to a major strategic position inside the C-suite, and counting on the finance perform to create worth, safe and improve aggressive benefit, and enhance general enterprise efficiency—all whereas lowering threat and persevering with to carry out their conventional roles.

Doing enterprise within the new regular has underscored the significance of correct and strategic monetary planning paired with strategic flexibility, each aligned tightly with organizational objectives for enterprise efficiency. From optimizing inner processes to satisfy stakeholder expectations to forging sturdy bonds with distributors to make sure provide chain resilience, finance leaders are tasked with discovering rapid and lasting options to unprecedented challenges.

Consequently, at present’s CFOs want new ability units and abilities. They should perceive rising applied sciences comparable to synthetic intelligence, knowledge analytics, and robotic course of automation. They should perceive and know successfully leverage monetary enterprise intelligence, threat administration programs, and new enterprise fashions constructed on collaboration, innovation, communication, and each resilience and adaptability.

Doing enterprise within the new regular has underscored the significance of correct and strategic monetary planning paired with strategic flexibility, each aligned tightly with organizational objectives for enterprise efficiency.

Prime Challenges and Priorities for CFOs

Whereas chief monetary officers have completely different priorities with regard to their particular industries, firm measurement, and areas of experience, at present’s CFOs face a set of frequent challenges that should be addressed to make sure their organizations are capable of compete and develop successfully at present and into the longer term.

  1. Digital Transformation

The COVID-19 pandemic has been each vilified as a killer of conventional enterprise paradigms  and praised as an unlooked-for blessing for companies swift, revolutionary, and fortunate sufficient to adapt to quickly shifting market situations.

However even earlier than the pandemic struck, digital transformation was redefining the parameters inside which the finance perform should function—and creating new alternatives to grab aggressive energy via data-driven course of optimization and analytics.

Digital transformation applied sciences grant finance leaders and their groups hitherto-unimaginable capabilities. Accounts payable (AP) automation eliminates the necessity for guide knowledge entry, boosts the pace and accuracy of high-volume, in any other case tedious processes, and eliminates human error whereas concurrently releasing employees to use their priceless ability units to extra essential duties no laptop can deal with (at the very least, not but).

AP automation instantly lowers prices—nonetheless the primary precedence for CFOs in 2021, in keeping with Deloitte analysis—and units up additional price reductions over time by way of steady enchancment by way of self-guided course of optimization.

It additionally helps essential inner course of enhancements comparable to guided shopping for and full integration with vendor programs, lowering and even eliminating frequent (and dear) points comparable to maverick spend and bill fraud.

Deep knowledge analytics, mixed with wealthy and intuitive reporting and forecasting instruments, make it simple to observe spend in actual time, create correct and strategically priceless studies drawn from actionable insights, and help the alignment of procurement and AP processes with organization-level objectives.

Centralized knowledge administration, paired with a totally built-in software program setting, connects all functions—from enterprise useful resource planning (ERP) to accounting software program to advertising and buyer administration platforms—whereas offering role-appropriate, safe entry to all stakeholders. It additionally eliminates knowledge silos and reduces the danger of miscommunication. It improves knowledge high quality, which in flip improves the strategic utility of analytics, forecasting, reporting, and decision-making.

Cybersecurity additionally improves because of state-of-the-art encryption, centralized knowledge storage on the cloud (moderately than native servers), and safe, single sign-on (SSO) entry.

Just by implementing a cloud-based, complete procure-to-pay (P2P) system like Planergy, at present’s CFOs can kickstart digital transformation for his or her organizations and start to combine core ideas comparable to steady enchancment, strategic sourcing (together with extra soft-value issues comparable to moral procurement, sustainable sourcing, and many others.), and data-based enterprise continuity planning into workflows in any respect ranges.

The consequence? Larger aggressive energy, extra agile and versatile responses to each enterprise disruptors and surprising alternatives, and improved threat administration. CFOs who put money into digital transformation and make strategic use of rising applied sciences are much better outfitted to make sure monetary actions generate worth for his or her organizations and supply a direct, demonstrable, and constructive influence on profitability, enterprise efficiency, and development.

  1. Adapting the Firm Enterprise Mannequin to Match a Altering Market

At this time’s international market is complicated. Companies who wish to push previous the competitors moderately than play catch-up want methods in place to assist them pivot in time to attenuate disruptions and seize worthwhile alternatives for development and innovation.

When the pandemic struck, for instance, many eating places, retailers, and grocery shops had been swift to both modify their enterprise fashions to include supply or associate with rising companies comparable to DoorDash and Uber Eats. Elsewhere, brick-and-mortar establishments whose staff had been quarantined at residence discovered themselves formulating and implementing distant working protocols and procedures—both as an growth of current work-from-home packages or for the primary time of their histories.

As enterprise leaders, CFOs are taking an more and more massive position within the choice to pivot their firms’ enterprise fashions. As monetary actions and the info they generate have a extra profound impact on the general strategic and monetary planning for the enterprise, CFOs should think about questions comparable to:

  • What uncertainties are we dealing with, and the way does that have an effect on our threat publicity?
  • What limitations are inhibiting development, and the way can we scale successfully to maneuver past them to make sure income grows sooner than prices?
  • Which rising applied sciences do we have to compete successfully, and are we forward of or behind the competitors in implementing them?
  • What modifications are vital to maximise our procedures, protocols, and processes for optimum efficiency and effectivity—each within the finance division, and the group as a complete?
  • Which metrics ought to we monitor to develop and implement these modifications?
  • How can we enhance money circulation administration to make sure we’ve got enough working capital for funding in development alternatives in addition to protecting emergencies and assembly our monetary obligations?

Fastidiously contemplating the solutions to those questions will assist CFOs and the remainder of the C-suite react successfully and make clever enterprise selections when confronted with a altering enterprise setting.

  1. Managing Money Move

Whereas Deloitte discovered that chopping prices remained the primary precedence for respondents In its Q2 2021 survey of CFOs, discovering methods to extend liquidity was an in depth second.

That’s not precisely shocking. Money is the lifeblood of most companies, and if the circulation grows sluggish or erratic—or worse but, stops altogether—then disaster isn’t far behind. Protecting enough working capital helps firms insulate themselves towards threat created by provide chain disruptors. However, preserving an excessive amount of money free can hamper enterprise development and efficiency when that money is just stashed moderately than put to work by way of funding.

Money circulation administration is carefully tied to stock administration, provider administration, and provider relationship administration.

For stock particularly, the scenario is similar to money. Protecting sufficient readily available to satisfy demand is essential, however an excessive amount of can find yourself costing you, both in inventory loss/deadstock or by tying up capital that may very well be producing a revenue by way of funding, product improvement, and many others.

Taking a collaborative strategy to provider relationship administration can assist enhance money circulation. Robust relationships make it simpler to barter higher pricing and cost phrases, seize reductions reserved for the perfect clients, and many others.

In the end, these complicated, interconnected programs and their shared dependencies require cautious oversight and proactive administration methods, which is another excuse why digital transformation is so essential. With out the suitable knowledge administration, automation, and forecasting instruments, it’s very troublesome for even seasoned CFOs to get the clear and full image they want of the varied “transferring items” concerned in optimizing money circulation.

  1. Constructing a Various, Development-Minded, and Collaborative Company Tradition

Whereas company tradition might sound extra the province of human sources than the chief monetary officer, trendy CFOs perceive that getting all of the stakeholders of their group on board with their plans and insurance policies will in the end result in a extra cohesive company tradition pushed by a shared imaginative and prescient for achievement.

Variety, Fairness, and Inclusion (DEI) initiatives—each inside their firms and as a part of exterior initiatives comparable to vendor variety packages—are one of many methods during which CFOs are offering the management wanted to construct this sort of company tradition.

  • Firms with DEI packages are as much as 120% extra prone to hit their monetary objectives;
  • Firms using an equal variety of women and men produced as much as 41% greater income;
  • Firms with various administration employees reported as much as 19% greater income than these with out it.

Past the monetary advantages, variety initiatives assist strengthen the interpersonal bonds between crew members. They empower staff by letting them know their voices can be heard and revered. And better of all, variety naturally fosters innovation and collaboration via the inclusion of latest viewpoints, ability units, and voices.

(Variety additionally attracts new expertise and boosts an organization’s repute, offering smooth worth that may result in extra gross sales, new markets, and many others.)

Innovation can be on the core of development, one other essential facet for finance leaders seeking to construct a company tradition centered on the longer term. Savvy CFOs perceive and leverage methods comparable to cross-functional collaboration to assist all stakeholders perceive not simply their very own roles within the firm’s success, however the methods during which their crew members contribute to the identical.

Ahead-thinking CFOs:

  • Prize innovation and schooling, making sensible investments to develop ability units, help analysis and improvement to safe new markets and clients, enhance merchandise, improve sustainability, and many others.
  • Put a premium on attracting top-shelf expertise accustomed to digital transformation applied sciences and the methods they help.
  • Increase the prevailing abilities of their crew with extra coaching, and aren’t afraid to outsource to safe new abilities or construct distant groups.
  • Prioritize work-life stability and try to attach with their groups as human beings whereas concurrently encouraging crew members to construct sturdy skilled relationships with each other.

These similar CFOs additionally put money into strategic initiatives and partnerships. They make focused acquisitions to decrease prices, enhance high quality, and additional streamline inner processes. They prioritize agility and search for alternatives to guard enterprise continuity in each course of.

Are You Able to Deal with At this time’s Largest CFO Challenges?

Slicing prices is just the start. At this time’s CFOs have a strong alternative to form not solely their firms’ monetary well being, however their strategic planning and aggressive energy. Make digital transformation a precedence, and use its instruments to enhance liquidity, cut back threat, and increase efficiency and earnings. Information your whole group towards a various, collaborative tradition centered on shared objective and success. Prioritize efficient responses to at present’s largest CFO challenges, and ensure your corporation is able to reap the benefits of tomorrow’s alternatives.

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