- Author: CFO Editorial
- Posted: October 11, 2020
Three Challenges CFOs must overcome in the 2020s
It is said that ‘change is the only constant in life’, and less than a year into the ‘20s we’ve witnessed this firsthand as the playing field has already shifted numerous times.
More than even before, CFOs are being called upon to leverage their analytical skills and take a leading role in strategy and risk management, while overseeing additional parts of the business through a finance lens.
NetSuite interviewed a number of key finance leaders around Asia-Pacific and Japan to discover some of the biggest challenges CFOs are now facing, and how they plan to overcome them.
Challenge 1: Leading strategy
In a rapidly evolving and volatile period, leaders must continuously review business and market data if they are to make the right decision at the right time. The CFO’s role as stewards of financial data have equipped them to conduct the rigorous cost and probability analyses needed to assess investments that have the best upside, while minimising risk and preserving cash flow.
According to Kim Jeanneret CFO, BioPak, “the CFO in 2020 is not just a finance role. It’s a corporate services role, and it falls under the remit of being the right-hand man to the CEO and board reporting. It’s about strategy, understanding how to improve processes and manage business transformation.”
CFOs are also being tasked with working across departments. For example, a CFO at a retailer looking to move to a more online sales model will need to consult with sales, IT and other departments across the business to determine the viability of this over the long term. This expanded, more strategic role will see the CFO of the future apply their skills to new areas.
Challenge 2: Improving planning for resilience
A proactive approach to scenario planning is critical during periods of high uncertainty. CFOs must accurately model the outcomes of all plausible scenarios to ensure the business can make the right move when necessary.
In these circumstances it’s important for business leaders to determine which KPIs are crucial to track, to keep the business moving forward. Planning reviews should happen much more regularly than the typical quarterly timeframe – at the very least once a week. CFOs must have visibility across the whole business and have a grip on data, finance, and risk to support decision-making if they are to contribute effectively.
For Mike Hirschowitz, CFO of fast-casual Mexican restaurant chain, Guzman y Gomez, quality data is essential to planning for the complexity of a franchised and corporate restaurant business. “Having access to regular, reliable, timely and relevant information is absolutely critical to the way that we operate the business. To respond to the big challenges around an evolving world, we need to plan for long-term change and make sure that we operate in a way that is seamless and connected to this world.”
Planning can never guarantee an outcome. But with the right processes in place, CFOs can prepare their business for short- and long-term challenges, build resilience and support business continuity in the face of adversity.
Challenge 3: Investing in technology wisely
Businesses have been leaning heavily on technology to support them through this period, whether to connect with customers or employees. Companies with an existing technology foundation were able to very quickly pivot to a new way of operating.
For Simon Robinson, CFO of Education Perfect, technology was instrumental in helping safeguard business continuity and adapt quickly to the changes the education sector was experiencing due to the global pandemic.
“Technology has been the enabler of these changes. Systems, such as NetSuite, allow me as CFO to review consolidated results in real time from anywhere,” Robinson said. “This helps minimise the amount of time spent preparing and analysing past financial performance, and more time working in all areas of the business to help optimise future results.”
Every area of every business is at a different stage in their technology journey, but the destination for all is the same. CFOs must work on sharpening their IT knowledge to understand and accurately evaluate the opportunity, scalability, and long-run sustainability of a technology solution.
CFOs should learn to work closely with CIOs to get a handle on the data the business is collecting and find the best ways to communicate what this means to other stakeholders in the business.
Next steps for CFOs
With the right tools and processes, CFOs can steer their business through challenges and become the strategic leader it needs. Whatever the next year or the future may bring, finance leaders will need to navigate risks, uncover opportunities and move their business forward.
Visit NetSuite’s ‘CFO of the Future’ resource guide for more practical guides, tips and resources to help you stay ahead.