Fluctuations in US interest rates over the last year have had a major impact on businesses across the country, resulting in a significant increase in commercial bankruptcies. Epiq Bankruptcy, provider of US bankruptcy filing data, has reported a 14% increase in August 2023 filings, compared to the same period last year, with high profile names such as Bed Bath & Beyond, Party City and SVB Financial Group just a few examples of organizations forced to file for Chapter 11 bankruptcy protection over this period.
Consequently, CFOs are doubling down on their efforts to cut unnecessary costs, improve financial planning, and deploy the best technological and workplace practices possible, all in a bid to remain profitable. As tempting as it may be to scale back on growth during times of instability, financial leaders need to be bold if they are to maintain their advantage over competitors.
Below are five key areas that CFOs need to prioritize in order to seize the initiative in these turbulent times and accelerate performance over the months and years to come:
1) Navigate effectively through disruption
As the end of 2023 approaches, the disruption of the last 12-18 months continues to be felt throughout many industries, leaving management teams facing one of the most demanding environments they have ever encountered.
In these uncertain times, finance leaders are expected to play a more strategic role in the organization, providing the financial insights needed to fuel top-down decision-making. Unfortunately, acting as a strategic business partner is easier said than done. Many finance teams are still plagued by spreadsheets and legacy planning tools that cannot deliver usable insights from the enterprise’s growing data volumes.
Most finance organizations have long accepted the importance of digital transformation, yet many still consider FP&A technology a capability that can be bolted onto their existing business. That approach doesn’t work. Planning transformation requires foundational change with different skill sets, practices, leadership, and organizational structures.
With continued disruption on the horizon, CFOs must prioritize initiatives aimed at bringing the entire FP&A organization to maturity, establishing planning as a critical decision-making process, and driving effectiveness and accountability within finance teams. This includes using state-of-the-art planning tools, capable of solving traditional FP&A challenges with data, automation, and collaboration, as well as more intelligent ways of working to redefine how stakeholders collaborate and make decisions to help organizations better navigate through disruption.
2) Make bold decisions
Right now, leaders in every industry are making strategic choices and creating initiatives that aim to keep their businesses competitive. To survive and thrive in today’s continuously disrupted market, business decisions need to be bold. But bold decisions made on hunches don’t cut it. Bold decisions need to be smart, rapid, and fully informed.
This year, with disruption showing no sign of abating, digitization, standardization, and automation will be critical as businesses focus on solving problems for their customers in innovative, lasting ways. It is here that technology investment is key, acting as the enabler for greater efficiency and visibility across the enterprise.
In the context of FP&A, digital transformation through the right technology enables finance leaders to plan smarter and react faster. Traditional barriers between finance and operations can be broken down to fully align strategic, financial, and operational plans enterprise-wide. Having the right numbers (and the whole picture) to hand at all times opens the door for scenario modelling, allowing finance teams to rapidly simulate the impact of different strategies and market conditions. The result is a finance function that can plan in near real-time and steer the organization on the right path during all manner of macro- and micro-environmental challenges.
3) Enable growth
As economic uncertainty continues to loom overhead, short-term financial health, cash flow, and profitability will likely be at the forefront of every CFO’s mind. The instinct to protect their organization’s margins may prompt a return to capital discipline, however reducing growth investments or focusing on short-term opportunities can make it difficult to maintain a competitive advantage over new entrants and incumbents.
Simply put, finance teams shouldn’t just be working to improve the bottom line. Yes, improving cash, working capital, collection, and cost savings is extremely important. However, they should also work company-wide to analyze the entire organizational value chain as a catalyst from within to help all divisions to create value, whether it is the supply chain, commercial team, manufacturing, IT, marketing, or sales.
4) Adopt smarter ways of working
There is rising pressure for finance leaders to deliver timely insights to senior executives that drive better decisions and higher enterprise value. The problem is, how do CFOs achieve this with a team that is already over-stretched without driving colleagues to burnout?
In reality, the only way to meet this demand, while maintaining performance enterprise-wide, is to move toward a new operating model. The ability to adjust work quickly and dynamically, do more with the same resources, and face the most pressing requirements of the organization head-on are all vital changes that will help CFOs tackle the demands placed on both them and their teams. Redefining the finance operating model requires the introduction of smarter ways of working coupled with a tighter, data-driven approach to planning, enhanced automation, and integration.
5) Look for talent beyond finance & accounting
The range of skills within a team also has a huge impact on its ability to strategically guide the enterprise. Traditional finance teams are made up of professionals who come from an accounting background, centered around activities such as consolidating numbers, checking data accuracy, and generating management reports. This expertise is still invaluable, but to become a strategic business partner, the function needs to evolve to include a larger skillset.
According to research by the International FP&A Board, if FP&A teams are to achieve a best-in-class approach that drives corporate success, they must look beyond finance to create a multifunctional team, led by a talented people manager, that includes a mix of skills including analysts, data architects, data scientists and influencers.
Finance leaders need individuals that can interpret and match organization-wide performance insights with the corporate agenda, helping to steer the company on the road to profitability and growth. Taking this step up will allow them to position finance as a nimble, trusted business partner that can work hand-in-hand with other functions to drive success.
As the business world continues to reel from the events of the last few years, many executive boards are looking to their CFOs to steady the ship and deliver growth in the face of major industry challenges. Doing so will not be easy, but by investing time and resources in the right areas, it is certainly achievable.
With this in mind, it’s perhaps no surprise that technology features so prominently throughout the five priorities discussed above. In short, digital finance transformation is now absolutely essential for millions of businesses around the world, and those able to achieve it most efficiently will undoubtedly be the ones to profit most in the months and years to come.
As Head of Portfolio Marketing, Pietro is responsible for leading go-to-market strategy, value proposition, awareness, sales enablement, and competitive intelligence efforts at Board. With 12+ years of experience in CPM, Analytics, and ERPs, Pietro has worked with many global-level organizations delivering value through the transformation of decision-making processes. He is also a subject matter expert for finance, sales, human resources, and supply chain, regularly contributing to blog, thought leadership whitepapers, eBooks, and webinars. Before joining Board in 2016, Pietro held engagement and program management roles in multiple management consulting firms. He has earned a Master’s degree in Computer Engineering from the Polytechnic University of Milan.