Under the influence of constantly changing business scenarios, technological progress, changing economic and political situations, the role of today’s CFOs is dynamic. Apart from traditional responsibilities, CFO’s are increasingly handling risk management, M&A transactions, and execution, corporate strategy, etc. Some CFOs are even involved in cyber-security and digitizing critical business activities. A survey conducted by McKinsey revealed that looking ahead, CFOs would prefer to spend less time on traditional finance work and more on strategic leadership, organizational transformation, performance management, and evolving technology trends.
Bigger responsibilities come with bigger challenges. While technological change and talent challenges remain their rising concerns, global economic growth and government regulations are high on the list of most worrisome external risks. Let us look at these top CFO issues in detail;
- Managing evolving technology – Internal finance operations have been transformed due to technology that has allowed for increasing levels of finance process automation. As finance is the key collaborator to the business, digitisation provides the data analytics needed for critical decision making. The major challenge here lies not only in streamlining these operations but also managing fraud detection, regulation, and compliance. Organizations embracing dynamic, cloud-based operating models position themselves better for cost optimization and increased competitiveness. CFOs are expected to constantly explore and implement the best new technologies.
- Maintaining and investing in talent – Attracting and retaining top finance talent is part of the role of CFOs. They need a clear view of existing talent, skill-sets required for the future and a succession plan to ensure key roles are always covered. This also involves the challenge of improving performance and developing the existing talent, while strategically hiring skillful staff who can fulfill the digital agenda.
- Managing the changing regulatory environment – While keeping up with the changing government regulations is tricky, CFOs are responsible for changing the regulatory burden to competitive advantage. This has to be seen as an opportunity to derive competitive advantage and to utilize data analytics. The CFOs are expected to ensure that the business adapts to the changing regulations while getting as much value for the business as possible in the process.
- Risk management – In order to manage risk, CFOs need to have a growth strategy mindset and be able to respond quickly to volatile market environments, using the most appropriate tools and technologies. The top risks to manage include economic conditions, regulatory changes, cyber threats, rapid speed of disruptive innovations, privacy management, resistance to change and sustaining customer loyalty.
- Cost and profitability management – The day to day management of costs profitability remains one of the key CFO challenges. The real challenge though is managing costs and profitability against the backdrop of economic change and specific industry pressures, whilst driving growth. Along with this, the CFOs should be able to strengthen the alignment between financial planning and corporate strategy, and also understand how financial and HR data can impact each other.
The new financial year promises to be an exciting and critical year for many companies. Overall, despite the risks, it is a good time to be a CFO, as technology will continue to slowly enable greater productivity in the finance department. Also, government regulations may loosen some of the red tapes that businesses think is choking growth.