The Biggest CFO / Boardroom Priorities for 2024

Whilst many businesses have a list of unique priorities for 2024, there are several that transcend business type / market and which should be front and centre at the start of the year.

Here are my top three:

1. Financial resilience

As we ended 2023, I was amazed at how many companies were raising funds, with new Issues, Rights Issues, and Share Purchase Plans.

ASX Listing Rules require certain types of companies to produce quarterly cash flow reports. This entails stating ‘Estimated cash available for future operating activities’ and if the funding available from cash and unused finance facilities is less than 2 quarters, the entity has to state what steps it has taken to raise further funds. This lays out in detail the cash position of the business and if there is the need to raise further funds.

It is difficult to manage a company that struggles to pay its creditors every month let alone try and grow that company.  Even dealing with low hanging fruit, such as closing loss making divisions and laying off non-performing staff, suddenly seems impossible to do, as the cash flow hit of redundancies, make good clause etc will impact a cash flow that is already under severe pressure.

The tighter and more precarious the cash position, the harder it becomes to raise funds at any decent valuation.

Before a business arrives at this junction it has to work out if it can raise money, and if listed on the ASX at what price. Even a severe discount to current share price may be worthwhile as the discount today may be the highest point of the share price as it heads downwards into oblivion if the cash position becomes too dire.

My first preference is a placement to sophisticated shareholders or institutions with a Share Purchase Plan for other shareholders, which gives other shareholders the right to subscribe for up to $30k in new shares normally at the same price as the institutions received their shares. I am also in favour of Rights Issues which gives every shareholder the right to participate at the same price. If the discount to the original price is severe, this provides shareholders the opportunity to average down their cost. 

Assuming funds are just not available from any source, but the company has a product or service etc that has potential, all strategies including mass redundancies need to be looked at to preserve the cash to give the company the longest runway to either try and raise money, increase profitably, or even sell to a financially stronger buyer.

2. Digital transformation & AI

Every company is, or should be, on a digital transformation path including incorporating artificial intelligence. I don’t know of any industry which can ignore digital transformation. Even my trusted doctor needs a digital transformation. I can already book on-line but when I ask for my plethora of medication scripts it seems to take my doctor forever to be able to electronically produce them. Stream-lining this process will enable him to see more patients per day, and the costs of implementing the system will soon pay for itself.

Most markets are already extremely competitive and running costs need to be kept to a minimum whilst customer experience needs to be maximised. Operations need to be streamlined and repetitive tasks need to be automated.

The customer experience can be enhanced with chatbots and personal recommendations. I personally don’t like dealing with chatbots, but if a chatbot can indeed give me the answer I am looking for, that saves a lot of time. I like to believe my enquiry or issue is unique but more often than not others have had the same issue.

At Corporate Travel (ASX:CTM) our raison d’ etre is ‘to deliver exceptional customer experience while ensuring internal efficiency within the operations’. To achieve this delicate balance between service delivery, efficiency and cost savings, Corporate Travel harnesses the power of automation and artificial intelligence with the use of chatbots, predictive analysis and workflow optimisation. Unfortunately this does involve a significant investment in back end automation but this pays ‘dividends’ with effective delivery and cost effective solutions for customers. 

3. Risk Management

If one thing the Optus debacle (the unplanned outage of all Optus internet, cellular and fixed-line services in Australia which directly affected more than 10 million people and 400,000 businesses across Australia)  has taught us is that with the best redundancy and security , one cannot safeguard against everything.  But one can try and identify all significant risks and mitigating strategies.

Most companies are very dependent on their telecommunications carrier and Internet service provider and when these both fail, mayhem can ensue.  Australia doesn’t at present have the same facilities as international roaming does, i.e. one can switch carriers if there is no service with a selected carrier. The Optus outage has prompted calls for the federal government to compel telecommunication companies to allow customers to use other networks when one fails.

There are other key infrastructure points that need to be considered, such as an electricity outage in one of the capital cities or in the offices / or factories, or a sophisticated denial of service attack.

A business has to identify who the key infrastructure people are, that the business would rely on, to help navigate this.

Another risk that both Qantas and Optus ignored is reputational damage.  Whilst Qantas may be able to shrug off the damage, the Optus issue claimed the CEO scalp and the ultimate cost may never be known.

Covid changed the landscape for many businesses, not least of all the travel sector. Not having risk management strategies to deal with events such as these, disruptions to supply chains and the inability to process payments from customers, can have disastrous consequences for any business.

Author: Jon Brett

Jon Brett is a Non-Executive Director of Corporate Travel (CTM) and Chair of the Audit and Risk Committee. Jon is also a Non-Executive director of Raiz Invest (RZI) and the NASDAQ  listed Mobilicom.

Jon is the author of the very successful podcast series “The Taking of Vocus” which chronicles the extraordinary rise of Vocus, what went wrong with the M2 merger and concludes with the privatisation of Vocus. The podcast  can be found via Jon’ LinkedIn.