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Challenges and opportunities facing the CFO in 2021 and beyond

Posted by Elizabeth Allcock on December 21, 2020 08:30:00

No one would have predicted the economic uncertainty we would face due to COVID, however the urgency of the pandemic and the recession have accelerated the increasing role of the CFO. Creating an opportunity for them to demonstrate the critical strategic role they can play in helping transform the future of their business. According to research by ACCA and the Institute of Management Accountants (IMA) 72% felt that the role of the CFO will either ‘increase or increase significantly’ in importance over the next three to five years. In addition, 68% of the CEOs felt that people highly value the strategic insights of CFOs.

Today’s CFO must understand how to create value for the organization and take a more active role in the operations of the business. Driving performance and profitable growth by cutting costs where possible and searching for new tactics and techniques to increase revenue.

Current challenges CFOs face

The pandemic has created many common challenges for companies, according to Deloitte almost two-thirds of CFOs do not expect demand for their own businesses to recover to pre-pandemic levels until after Q2 2021. They must meet growth and profit expectations and stakeholder demands whilst keeping pace with rapid change, expanded regulations, and a shift in consumer expectations.

  • Becoming more agile

The pandemic has clearly demonstrated the need for companies to be more agile. Otherwise, businesses without a plan-b could struggle to recover and some could not survive at all. A KPMG survey from 2018 found that 59% agreed that ‘acting with agility is the new currency of business; if we’re too slow, we will be bankrupt’. Whatever industry or size of business, CFOs need to try and pivot their organisations, processes and systems to stay ahead of the most demanding accounting challenges. Finance leaders need to realize the limitations of outdated platforms in helping their companies innovate their way out of crisis and move to equip their employees with the digital tools they need to keep operations running.

  • Disparate systems & unused technology

Many companies are running numerous software platforms or have invested in technology to seemingly solve their problems and still lack the human talent to run it. These disconnected systems often require manual data entry using Excel spreadsheets and are one of the main reasons that many organizations are still struggling to stay on track of their rebate deals. More often than not, even companies that have one dedicated software system for managing rebates, and have spent the time, effort and budget on implementation, do not have the finance team they need to effectively use the software efficiently. They have tried to solve a people problem with technology and seem to still be running into the same issues’ month after month.

  • Alignment of stakeholders

CFOs must focus on aligning stakeholders as new technologies are invested in. Instead of sectioning off different parts of the company, CFOs should look at improving communication and streamlining uncertainty between divisions. This has become all the more important with workforces working remotely. You should no longer view your role as CFO as insulated. Instead, look to collaborate with other executives in 2021. With better integration throughout the company, the CFO can take on a more cohesive leadership role.

  • A mainly remote finance team

Under the current changing circumstances, CFO have had to transition their employees to working from home. However, if you haven’t managed a remote team before it can be a daunting task especially if you don’t have the right technology in place. We already know that cloud-based solutions give your finance team the ability to access all of the information from anywhere to get their job done but how long will it take for the CFO to adapt to this new way of working.

  • Making sure data is accurate and auditable.

While inaccuracy is generally inevitable in the course of business, accurate and auditable financial information is critical to auditors. They dream of quick, easy, and uneventful audit engagements likewise so do CFOs as it makes the process easier for everyone involved. It’s crucial for the CFO to manage the avoidable issues and inform auditors in a timely way when the unexpected occurs.

Opportunities for the CFO:

75% of CFOs expect the COVID-19 pandemic to have ‘significant’ or ‘severe’ negative effects on their businesses over the next 12 months, a Deloitte survey shows. However, streamlining data and adapting new technology should be a key part of the recovery plan, as it will help to give CFOs the information and confidence to make tough but critical decisions during these challenging times.

  • Digital transformation

This is the first economic disruption that requires a large part of the global workforce to perform their role remotely, making cloud computing necessary to keep the business functioning throughout 2021 and beyond. Protiviti annual Finance Trends Survey revealed that 72% of CFOs and VPs of finance ranked cloud-based applications as a top priority to address over the next 12 months. For finance teams operating manually, the switch to remote working has exposed a lack of control and visibility within rebate management processes but with the cloud this could all change.

Many CFO’s are now being forced to recognize they need new digital technologies, skilled talent, and innovation, but that doesn’t mean change comes easily. Executive buy-in may be difficult to obtain but failing to adapt digital transformation could mean a company is left behind those companies who adapt quickly. According to Gartner, in 2023, many of the core financial projects that were slated for 2024-25 will be undertaken sooner to improve financials during periods of economic recovery.

  • Closer collaboration with CIO

With technology playing a larger role in driving company value and competitive advantage, it is more important than ever that CFOs collaborate closely and effectively with CIOs.

Gartner says that “Application leaders must work with IT to shape and evolve current inflexible, monolithic applications into a portfolio that is more modular, consumable and adaptable to business change. This will allow the finance organization to gain increasing levels of self-service for technology-dependent business innovation”.

It can be very difficult for CFOs to keep up with IT as it evolves so rapidly, to determine capabilities and staying ahead of tech trends requires partnership with the CIO. The CIO can give the CFO perspective on which tech is needed and which can be done without, to update legacy on-premise systems, increase business agility, improve business processes, and ultimately fuel growth.

A Gartner report suggests that, “A new solution may not be a silver bullet for all organizations, but IT leaders should seek to study and understand how new and improved capabilities can move the organization forward”.

When the CIO and the CFO work collaboratively to find and implement these technology improvements, the company becomes more effective than when they take a siloed approach on a per-department basis. By keeping the needs and challenges of your CIO in mind and approaching the conversation with empathy, you can strengthen the entire company through the trust you build together.

  • Automating rebate processes

There are a number of financial processes that may be appropriate for automation including rebate management. With lots of data, finance teams can struggle to keep up using spreadsheets and manual methods. Without automation, they have to spend all their hours collecting data and ensuring data quality, leaving little time left over for analysis, reporting and strategic recommendations.

However, automation changes everything. Now these siloed manual finance processes can give way to cloud-based platforms that vastly simplify rebate management. According to Accenture’s Finance 2020 report, automation will eliminate up to 40% of the transactional accounting work the finance department does today.

Most CFOs see the benefits of harnessing the power of automation for a stronger, more effective future. Fragmented systems can lead to costly results during a time when every penny counts.

Are you prepared for 2021?

As CFOs seek to boost the resiliency of their finance departments and return the business to growth, they should consider the above opportunities. With a resilient, agile organization, finance teams will be well positioned to take advantages of new opportunities and return the business to growth quickly.

Although it’s uncertain when the economy will start to recover from the impacts caused by COVID-19, it is not too soon to think about your organization’s future plans. If you want to see how Enable can help, get in touch.

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Topics: Industry sector: Finance, Digital transformation