By Sam Lobley, National Leader - CFO Advisory
The challenges facing the modern CFO are greater than ever, just as there are many opportunities and often several potential solutions. But sometimes the most powerful decision is around what not to do.
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More than ever, the environment in which CFOs are working is uncertain. The pace of change is relentless, and the flow of financial and non-financial data increasingly complex.
At the same time, the expectations of businesses, Boards and other stakeholders have never been higher. There is an increasing need for trust, for transparency and relevant and accurate commercial insights at the push of a button. These range from the need for live static insights “Are results on or ahead of forecast” to more complex predictive analytics such as “Where’s our next growth opportunity?"
Within a multinational, it’s expected those working in a small branch in Vietnam will have the same levels of systems and processes, governance, ethics and integrity as their colleagues with a Sydney head office.
So the CFO must be all-seeing and all-knowing, ready to respond to requests for insights that accelerate decision making, often within tight timeframes. Working within constrained budgets is typically part of the landscape. These are immensely competing pressures. Where does the CFO focus to deliver the best value to the business?
First, they must ensure that their team is aligned with the culture of the business and live and breathe the organisation’s vision and strategy. The right people must be in place to do the right work, in the right locations and using the right systems.
Second, they have to ensure that systems and processes are fit for purpose so that transactional activities are performed as accurately and efficiently as possible, in a robust manner and with appropriate governance.
Third, working with the business they need to determine the business-critical information, the metrics that matter and will make a true and measurable difference across the entire organisation. In a world with almost limitless data, the CFO should concentrate on producing only the most useful information. Figuring out exactly what information the business requires also permits the CFO to recognise the information the business does not require. This is powerful knowledge.
It’s crucial the information being provided is relevant, timely and insightful. It must help support answers in the business rather than simply providing information for the sake of it. Investing in specific areas, capabilities, and systems and getting the timing right can be a challenge because of the constantly changing business environment.
Understanding the systems critical to the operation of the business is the right place to start. It’s about establishing baseline levels of control and processes. Without being clear on exactly what’s required it can be easy to invest in technology that isn’t aligned with what the organisation needs. Systems must provide the information flow that is needed at the right time. Once governance, processes, and controls are standardised and simplified, it’s a lot easier for the business to respond effectively to cultural challenges and varying market pressures.
Having established baseline controls and processes, the team is then well-positioned to make decisions on where they invest their money (and importantly, where they don’t) into systems supporting other business functions such as brand and marketing, sales and pricing, and supply chain. Finance is the glue that brings these separate functions together, driving better outcomes for each of them as a result.
The success piece always circles back to strategy, business performance, process, and governance. Each should drive the other. When executed well, the result is great trust amongst and between all stakeholder groups including management, staff, customers, suppliers, shareholders and the community.
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