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What crucial changes do CFOs need to make right now?

Faced with unparalleled adversity, CFOs have to become stewards of business’ futures. Recent months have likely been the biggest challenge in most CFOs’ careers; with almost no warning, millions of businesses – indiscriminate of size or stature – suddenly went from operating as usual to facing enormous challenges under the weight of uncertainty. Nick Jackson, president at CIMA and finance transformation leader at Oracle, writes


 

When global uncertainty is coupled with increased scrutiny from the CEO, board, investors, employees and customers, every move the CFO makes is critical.

With these challenges to meet and tough decisions to make, the CFO is at the centre of a rapidly changing economy.

The major challenges

There are four areas where the CFO is absolutely crucial: managing cashflow, investing in the supply chain, working closely with HR, and focusing on customers. Each one presents its own challenges, and CFOs must tackle these head on, make important changes where needed, and be a confident steward through crisis.

The most immediate challenge faced has been managing cashflow. Many businesses, while inherently profitable, found themselves struggling to make ends meet with insufficient working capital readily available to stay solvent. This lack of economic resilience does require short-term cuts, but it also relies on intelligent decisions that will keep the business healthy in the long term.

This means long-term scenario planning, speedy impact analysis, and regularly taking a close look at their cost base. CFOs need to predict the unexpected and preserve continuity as much as possible. This will create real resilience within a financial strategy, ensuring that CFOs and finance teams are able to address current needs as well as potential future crises.

The next focus area is supply chain. For decades, ‘lean’ has been the name of the game. But lean, just-in-time supply chains have struggled in the face of global crisis. To get back on track and plan ahead, spending big to ensure supply chains are robust and resilient, not lean, will be critical.

To achieve this, CFOs must work closely with supply chain managers to identify and prioritise the changes that matter most. This requires increased visibility across operations, not just in terms of product whereabouts, but into the partners and stakeholders that supply chains rely on. Increased transparency is the goal.

Balancing act

Next, when your biggest asset – talent – is also your biggest expense, balancing cost-cutting with ensuring the business can still function effectively is vital.

To walk this fine line and ensure every decision made helps safeguard business continuity and survival, the CFO should work closer than ever with HR. Together, they can master their business and its wealth of data to see where skills and resources are needed most in the here and now, while planning for whatever the future may bring.

In particular, this means tapping into predictive data to understand workforce trends. Doing so can allow businesses to drive cultural change and help employees adapt to the future direction of the business.

Finally, a people-driven approach is vitally important not just when it comes to employees, but also customers. Delivering good customer experience is one thing, but right now, CFOs and finance teams getting closer than ever to their customers – and their suppliers – is what will set you apart.

For every short-term decision made, CFOs should also be thinking about the long-term impact – not just on their business but, crucially, on customers. The way you operate must reflect shifts in customer priorities, to show you can balance their needs with those of the business. This will prove that you are the partner they can trust to guide them through uncertain times, now and in the future.

No more status quo

The CFO is responsible for more than the purse strings and getting the numbers back on track. Being the dependable steward of the business is no longer about maintaining the status quo. It is also about being determined to drive change where it matters most. They have to set the standard for the CEO and the board – changing the way their business is run, how it picks itself back up, and knowing what it will take to move forward. This will take resilience, long-term thinking and empathy.

Businesses without the determination to change focus from shareholder to stakeholder will not fulfil their purpose: to deliver for customers, sustain profitability and succeed. Businesses who set the bar high now and prosper long term will have one thing in common: CFOs who are the face of change, acting as the leaders they need to be.

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