Let bygones be bygones, like the pandemic.
The pandemic era has long gone, yet its impact continues to keep us awake at night; its existence wasn’t a simple one, as it broke new ground for many industries. Ever since the pandemic, a number of industries went for drastic changes, gambling with the future of their companies at stake.
Organisations sweat to brainstorm new approaches, adapt to the current environment, and work in a world where everyone exists virtually. Opportunists sought ways to take advantage of the new situation, and CEOs and stakeholders worked together to maintain the company’s reputation. It was no different for CFOs; they needed a novel and unique approach to dealing with the future of finance.
The old ways seemed to work perfectly—investing in more people to work on complicated spreadsheets. However, when the pandemic came knocking on their doors, what was the usual turned into siloed workflows since everyone had to do things individually.
The Role Of CFOs
The Chief Financial Officer (CFO) plays a crucial role in an organisation, encompassing various responsibilities that ensure financial health and strategic direction. Here are the five prominent roles of a CFO:
Financial Planning and Analysis
CFOs play a pivotal role in crafting and supervising financial plans and strategies that align with the organisation’s objectives. This encompasses examining financial data, predicting future trends, and offering perspectives to facilitate informed decision-making throughout the company.
Overall Financial Management
CFOs are the financial maestros of an organisation, steering the ship when it comes to budgeting, cash flow management, and finding the perfect balance for capital structure. Their mission is to make every dollar count, boosting profits and fueling the company’s expansion.
Risk Management and Compliance
One of the critical roles of CFOs is to proactively identify and effectively manage financial risks that could potentially affect the organisation’s success. This involves implementing smart risk mitigation strategies, establishing robust internal controls, and ensuring the organisation complies with all regulatory guidelines and reporting standards.
Investor Relations and Capital Allocation
CFOs interact actively with investors and stakeholders, showcasing financial performance and growth prospects. They are responsible for making strategic decisions on capital allocation and carefully weighing investments in innovation and business expansion to deliver returns for shareholders.
Strategic Decision-Making
As key advisors to the CEO and senior management, CFOs carefully assess the financial impact and offer valuable perspectives on potential risks and rewards when making critical decisions, such as mergers, acquisitions, and capital investments.
CFOs’ Role During The Pandemic
In response to the changing landscape, numerous organisations have been compelled to shift their focus toward digital transformation as traditional methods appeared ineffective for the current circumstances. CFOs need to leave no stone unturned to support the most crucial aspect of any business—finance. They had to take into account issues like remote work, financial planning, budgeting, and forecasting. This resulted in more organisations investing in cloud-based solutions to adapt to the permanently changed global business environment.
Fast And Furious? The Urgency To Speed Things Up In The Business World
When a discussion arises on a business topic, people will point out how some markets are becoming oversaturated. Then, how should one deal when trying to thrive in a saturated market? There might be thousands of answers to this, considering every aspect, personal view, and use case. If we can collectively agree on one answer, speed is the majority pick.
The increasing pace of business is driving fierce competition among companies of all sizes. Consequently, organisations that fail to embrace a culture of agility and adaptable strategising will not endure in the new business landscape.
This new market has put intense pressure on CFOs and their teams to contain new expenditures, recoup pandemic-related costs, drive process efficiencies, support speed-to-market, and build business agility. At the same time, CFOs need to maintain business-as-usual functions.
The pressure was even bigger on CFOs and their teams. Why? Crucial business traits like expenditures, business agility, how this can be in the long run, support speed-to-market, and driving business efficiencies, all go back to the role of a CFO.
Success is all about speed, especially in an oversaturated market. Take a look at the speed-to-market concept, where you must always be quick when dealing with market opportunities, or you will miss the boat. A faster speed to market can offer a substantial competitive edge, empowering businesses to establish their presence, improve customer satisfaction, and maximise revenue opportunities.
The “Nokia 3310” of FP&A
The Nokia 3310 was once a legend, known for its simplicity and practical usage. It has everything a basic phone has: text messages, calls, and games. It was once considered the peak of technology. However, as the modern world progressed, the Nokia 3310 couldn’t catch up with the latest advancements that a basic phone has: a quality camera, video recording, photo editing, and, most importantly, the internet.
The same analogy can be used for FP&A using Excel spreadsheets. Although Excel still maintains its relevance, in a sense, you can do FP&A using Excel. However, as your business progresses and grows, Excel might not be as practical.
To thrive is to be fast, or so they said.
Achieving this significant endeavour is impractical through the use of Excel spreadsheets for business planning and forecasting. Spreadsheets lack the necessary collaboration and scalability needed in the digital business environment, hindering effective financial strategies and decision-making for CFOs.
It’s time for most organisations to face the reality and admit that business operations may never return to pre-pandemic levels. As an efficient CFO, you need to understand how the pace of business escalates rapidly as most companies realise the efficiency and competitive gains that can be achieved through automation, and this starts with the office of finance.
Top 3 Most Useful Tools For CFOs
Three cost-effective tools can arm CFOs with the automated and flexible capabilities required for future competitiveness.
Budgeting and planning tools organisations can enhance their operational efficiency and decision-making by leveraging cloud-based corporate performance management solutions. These solutions enable continuous budgeting, planning, reporting, and analysis, providing timely data insights for informed decisions.
These advanced tools have the potential to significantly reduce budgeting and planning cycle times, allowing the finance team to shift their focus from operational tasks to strategic business activities in just a few days. Additionally, these solutions enable the finance team to perform rolling forecasts and more frequent planning, enhancing the organisation’s resilience and agility.
Financial and management reporting tools
One of the most significant challenges for organisations regarding financial and management reporting involves the timely consolidation and reconciliation of data.
Although Excel spreadsheets may suffice for small, start-up businesses, they are restricted in their scalability as the business expands and evolves. Data is frequently fragmented across multiple systems, posing challenges for integration and consolidation for reporting purposes.
Business intelligence and analytics tools
Cloud-based business intelligence and analytics solutions provide timely insights across sales, marketing, operations, and HR, complemented by detailed plans for variance analysis. This allows finance teams to access reliable, precise data within minutes, empowering the management team with the information necessary to make strategic, forward-looking decisions.
Workday Adaptive Planning: The Solution To Excellent Budgeting And Planning.
Workday Adaptive Planning is always at the forefront of modern FP&A. As a long-time ally of Machine Learning (ML) and Artificial Intelligence (AI), the solution emphasises how automation empowers FP&A teams to make strategic decisions in less time than presumed. What differentiates it from the other solutions is its approach to “working together” with Excel rather than altogether abandoning it, which means you can integrate your Excel or any system you use with Workday Adaptive Planning.
Take, for example, Deloitte, one of the big 4s. Pre-workday adaptive Planning held them back from their ambition to scale operations, uplevel client experience, and expand globally. Their implementation of Workday Adaptive Planning was an initiative taken to improve their system, which enabled them to:
- Boost user ability to recognise and submit what-if scenarios for approvals within the system
- Unify information into one standard system
- Drive user adoption and engagement, resulting in client satisfaction
Every urge for change starts with a big ambition, just like Deloitte’s ambition to scale operations, and Workday Adaptive Planning helps them realise that dream.
