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The vital role of a CFO

by Mike Jones in EPM, finance 28/10/2020

Leading members of the finance industry explain how businesses can transform and maintain performance levels through the pandemic. Financial leaders are playing a vital role in managing businesses through the pandemic and associated economic challenges. A recent study by CFO Research combined with FTI Consulting interviewed 325 chief financial officers and senior executives to get a better understanding of how finance is supporting and driving business value. The results presented five core themes:- 

-The work of CFO’s during the pandemic has shown what impact financial leaders can have on the wider business strategy. Covid-19 has emphasised the ability of financial leaders to manage what is often an overlooked part of a business: corporate scenario planning. 

-With significant changes to the economy, CFOs have managed to maintain productivity via remote teams. The survey indicated that over 70% of finance professionals worked in a remote workforce model. 

-continues to progress and while many CFOs are adapting and utilising automation tools, the survey indicated that automation is yet to reach its full potential in many businesses. The general corporate finance service delivery model is transforming. Over 40% of the respondents stated that their finance work was performed by a shared services organisation, nearly 50% said they used business process outsourcing or alternative hybrid models. Looking to the future, CFO’s are in a position to manage lead strategies and value development of a business. Finance has the capability of delivering insights on predictable measures in a volatile market, a vital asset in helping a business determine the cost, risk, working capital and overall capital structure. 

CFOs transforming into strategic leaders During the pandemic, CFOs have demonstrated the potential to generate models based on various scenarios, the ability to transform, make informed decisions and most importantly, lead their business through the pandemic. Respondents of the survey indicated that finance executives view their CFOs as vital members of strategic leadership, planning, analysis, technology and automation and detecting risks. Approximately 90% of respondents indicated that their CFO’s core functions include:-

Overwhelmingly, the surveyed finance executives portrayed their chief financial officers and finance teams as rising to the task across the domains of strategic leadership, planning and analysis, use of technology and automation, and identifying risks. More than nine out of every 10 of the survey respondents said their CFO and finance functions: 

-Important roles in guiding the overall strategy, making key operational decisions and supporting enterprise values across the entire business. 

-Driving value by detecting areas and leading plans to reduce and optimise business costs. 

-Applying innovative technologies i.e. predictive analytics and automation to generate accurate and relevant information. 

Remote working 

As with all business leaders, CFOs needed to adapt to remote working conditions, the cultural changes and the overall talent challenges. The survey findings suggested that CFOs were well prepared with automated-driven tools and were capable of responding quickly to specific priorities, processes and the preservation of talent and culture in the business. 

The main priority for CFOs in regards to the pandemic was enabling a remote workforce, according to the survey results. Over 40% of the respondents stated that finance teams adopted a remote working system, with nearly 30% transitioning to predominantly working remotely. The challenges from this transformation included the implications on cost management, financial planning, analysis, budgeting and forecasting (40%). Over 40% of the respondents claimed that risk management, working capital management, adopting new technology, and accounting and financial reporting were largely impacted. 

Automated Technology CFOs have progressed in regards to applying robotic process automation to specific finance functions, but there are still opportunities to enhance this further. Most CFOs have adopted automation to a certain level, with nearly 80% of the respondents indicating that at least one of the members of their finance team was ‘virtual’ i.e. they were using RPA and other automation tools. The survey findings indicated that for smaller businesses, the number of virtual workers was significantly smaller, suggesting that automation hasn’t reached its full potential in many businesses. Over 50% of finance executives indicated that eliminating and automating manual tasks was a top priority. Cost containment continues to be a key concern for CFOs. Over 30% of respondents stated that they intended to increase the use of captive shared services, BPO, GBS or an alternative hybrid model to utilise cost models during a disruptive business environment. For many senior finance executives, the CFO is regarded as a finance and accounting leader. The survey highlighted that finance professionals also regard CFOs as a business leader, value creator and someone who drives efficiency and effectiveness within a business. Nearly 90% of the respondents indicated that the CFO had the talent and expertise to enhance enterprise value for the business. In the short term, CFOs have proven how a business can survive during the initial phases of the pandemic. In regards to the long term, CFOs will examine initiatives that focus on cost savings. Finance executives believe that improving planning, scenario modelling and forecasting are top priorities for CFOs over the coming year or so. To achieve these strategic goals, over 80% of the respondents believed this required evaluating, implementing or focusing on existing planning, forecasting and budgeting technologies.