The cross-functional role of CFOs in regional businesses

The function of a chief financial officer has changed as a result of rapidly evolving technology, which is revolutionising businesses and causing disruption. CFOs today have to work with big data and analytics, new tools that they can use to drive business insights and reconfigure the financial process. While this opens up new avenues, it also comes with added pressures, as CFOs need to be more flexible than ever before in order to deliver results and drive better services for the business, at zero cost impact.

This has never been more important than in the midst of the Covid-19 pandemic. Traditionally, the finance profession has been built around technical facts, operational functions and a logical flow of information.

However, the impact of Covid-19 and the increasing digitisation of the workplace brings several opportunities and challenges in the finance and accounting world. Businesses are investing more in technology and focusing on R&D, meaning that CFOs need to adapt quickly to a changing environment, while also adjusting to the current economic framework in order to enable sustainable business change.

In times of upheaval, it is essential to stay flexible in order to deliver the best results for a business. Part of this means breaking out of the traditional silo and donning multiple hats by becoming a key supporter of performance management, technology strategy and talent development, to help the company achieve the greatest value.

This evolution into a cross-functional role is proactive and organic, given the interdisciplinary understanding finance and accounting professionals have of how the various aspects of business eventually connect.

CFO functions are at the forefront of digitisation and help create value through strategic leadership. The CFO role has gradually become more centre-stage and has taken on a more strategic hue; it puts them in a position to drive change, and they must take advantage to safeguard the business at all times. This also means building a stronger business that is resilient and
capable of withstanding the test of time.

Cash flow deserves special attention. Here are five key tips for businesses to navigate these challenging times:

1. Cash flow considerations: Understanding the cash and working capital needs is the most important first step in any cash flow management strategy. Consider assessing your cash flow situation for multiple timeframes, such as 60 days, 90 days, and six months. Each of these may require further consideration of different scenarios.

2. Document expected payments: An important first step is documenting all your payments to get a complete picture. Work through what your revenues, expenses and cash flow will look like over the time frame you are trying to manage.

3. Apply the 80/20 rule: After assessing the situation, identify the 20 per cent of customers that bring you 80 per cent of your revenue, and focus your attention on collecting what you can from them. Prioritise existing and long-term relationships over new ones; those are the customers who are most likely to understand and be willing to work with you.

4. Consider factoring: If your accounts receivable is significant, factoring may be another option. If you consider this alternative, make sure you understand the terms of any agreement so you can approximate these costs for your cash flow projections.

5. Operating costs: Reach out to vendors and ask for payment term extensions. The reality at present is that most – if not all – businesses have been affected by Covid- 19, and CFOs are currently key partners in helping to strengthen businesses as the economy picks back up. There is no time like the present to ensure that finance and accounting professionals have the knowledge necessary to contribute during this critical time, making reskilling and upskilling an essential consideration.

Education and learning platforms across the world have given free access to their resources for people to make use of and improve their knowledge and skills. This can help create leaner and more agile teams that are able to perform multiple functions.

Implementing a learning organisational approach could also be great for employee retention, not just business continuity. This is undoubtedly a unique time to be a CFO; one that requires agile thinking and a progressive approach.

Doreen Remmen is the CFO at Institute of Management Accountants (IMA)