What Gives CFOs Sleepless Nights?

The term ‘Chief Finance Officer’ barely does justice to the repertoire of responsibilities the modern CFO shoulders. Outside the realm of their core competencies of financial reporting, compliance and audits, their voices are heard more strongly in matters of capital allotment and corporate management decisions.

It would be an understatement to say that this is only the tip of the iceberg. The role of these former bean-counters is poised to skyrocket in importance in the coming years. However in reality, finance personnel still struggle with toggling between their two most important mandates: operations and strategic planning. Experts suggest that in an ideal world, CFOs must spend only 10% of their time on transactional activities while the remaining 90% must be spent on their analytical roles. At a time when layers of complexity wait to be addressed, most CFOs are still bogged down by the daily tactical rigmaroles of reporting and number-crunching, with little or no time for ‘big-picture thinking’ that is expected of them. It’s quite obvious that the CFOs of today have their work cut out in charting their paths towards growth. But what are the top issues that keep them up at night?

Data, Data Everywhere

In a paradox of sorts, the abundance of data has become the source of trepidation for many CFOs. At a time when they have unbridled access to massive amounts of information, their jobs of handling it are becoming proportionally complex. Especially, if CFOs are steeply inclined towards purely finance-related functions, managing great volumes of data becomes nothing short of drudgery.

But to those who have realized its benefits, data and analytics have proven to be crucial for businesses to find new markets and new verticals to generate greater revenues and also for understanding and controlling costs. Though a CFO’s forte may not lie in data science, it is important for him or her to be the connect between business and data. The insights gained from avidly monitoring the wealth of data are invaluable assets that a CFO can bring to the C-suite and aid smarter business moves. Today there is a huge opportunity for CFOs to partner with their companies’ CIOs in order to ‘own’ analytics and take a data-driven approach to strategic planning.

Putting Together The A-Team

It should come as no surprise that human resources (especially the best ones for the job), hold great promise for the welfare of an organization. The mettle of the 21st century CFO is tested by the exacting standards with which new hires are attracted and retained. CFOs are now handed the challenge of identifying candidates that display prowess not just in finance, but also have a keen sense of analytics and clear communication. In fact, a study by Accenture reports that by 2020, companies’ most essential talent will not ‘finance’ talent at all – they will be a melting pot of data scientists, economists, behavioral scientists and statisticians. While this makes the hunt for potential targets even more trying, it is expected to revolutionize careers in finance.

A thoughtfully handpicked, versatile team means freeing up a CFO’s time for more innovative and strategic roles. Clearly, the team hired by the CFO has a direct impact on not just his own team but the organization as a whole.

Cash Flow Management

Though it may seem like a case of meat and potatoes, emerging trends reveal that CFOs still attach a great deal of importance to cash management and overall finance functions. However strong their competencies may be in peripheral responsibilities, CFOs are still accountable for balanced finance books. The possibilities of adversities such as political uprisings, natural calamities and global financial unrest pose a significant threat to the company’s cash flow. Market volatility, though commonplace in today’s economic climate, is a cause for concern in most CFOs’ minds. Companies of all sizes have their focus fixed on improving the efficiencies of and cutting costs. Therefore the onus of leading the department as well as the entire organization towards that goal lies with the CFO.

Allowing Technology To Do Its Job

According to a study by Forbes Insights and KPMG, 63% of CEOs surveyed from high-performing organizations believe that technology will have the greatest effect in the future role of the CFO. It is predominantly in the hands of the CFOs to decide what that effect is going to be: will they grapple with technology that they don’t understand until they are finally rendered dispensable? Or will they grab technology by the horns and use it to alleviate their worries?

By choosing the latter, CFOs will be able to focus on disruptive technology such as automation software that will help them play a more strategic role in assessing new markets , improving financial performance and championing compliance. To be successful, technology must not be viewed as an additional ‘liability’ that could put finance leaders out of a job. It can be turned on its head and be converted into an opportunity.

Consider The Three Trepidations Discussed In This Article:

When companies switch to more sophisticated automated solutions such as pre-paid cards, they are equipped with intelligent and intuitive analytic tools. The insights that are generated as a result go a long way in making the CFO a credible strategic counsel to corporate governance.

CFOs are more likely to attract and retain good talent if they are able to offer them the most benefits of automated travel and expense reporting: freed up time to do pour into innovative pursuits. With advantages such as cashless/paperless transaction and reporting on-the-go, employees have a greater shot at work-life balance as well.

A CFO’s mantra for successful cash management should be that of embracing volatility and being prepared for ‘cold winters’. Automation software makes it possible to forecast such contingencies and helps to make suitable pivots to business strategy.

In summary, the CFO of the future will have to step his/her game by unlearning and re-learning conventional finance functions such as transaction processing, audits, risk management and reporting. They are all set to take on a new definition in the coming years and serve as a constant reminder for CFOs to stay technologically relevant and tide with the times.