Finance functions priorities have changed during the pandemic with managing cash flow, credit control and involvement in high level business strategy all becoming increasingly important according to a survey of more than 50 CFOs by Ignition Global Consulting.
The survey shows that forecasting & managing cashflow has become the key priority with 70% of CFOs stating that this has become much more important.
The top three areas that are far more important to CFOs and the Finance function during 2020:
- Forecasting and managing cash flow which is more important or much more important to 96%
- Credit control management and collecting payments is more important or much more important to 93%
- Involvement in business strategy & high level decision making is more important or much more important to 85%
Other areas that have become significantly more important
- People management / HR matters which is more important or much more important to 74%
- Raising capital & new sources of funds which is more important or much more important to 67%
Very few CFOs reported any areas that had become less important, showing how the finance function is playing a prominent role in the business and taking on additional responsibility during this crisis.
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We asked four CFOs for their opinion:
In your experience how have the priorities of the Finance function changed since the COVID-19 situation began earlier this year?
Rajat Gupta: COVID-19 has sent most of the businesses to “survival” from the “growth” mode. Finance function has adopted well with the requirement and changed its focus accordingly:
- Improve on liquidity by re-looking at credit facilities and related terms, managing the payment cycles and policing the expenditure.
- Frequent and detailed reporting to update the stakeholders on business performance and highlighting the “needs”. Accuracy has become more critical.
- Planning for both, worse and recovery. While scenarios are built to show the worst possibilities, an eye is kept on the road to recovery to take better future based decisions.
Alvin Tan: The Finance function has become more important in my Company as the Finance folks have to ensure the Company do not get into any Cash Flow issues and be able to spot and highlight any potential issues that would put the Company in a Cash strap situation.
Hafiz Roslan: Like many organisations, the Finance teams that I have been involved with in the last couple of years are those that are proactive more than reactive. Given this nature of proactiveness, Finance has position itself to be relevant and adaptable to the changing environment regardless of the core business it is in. Covid has indeed hit hard and the priorities for Finance would have remained the same although the involvement would now become more required. For example, we would have budgeting as priority in Q3/Q4 period however the level of involvement this year will be higher. Finance will spend more time in the driver seat and provide deeper insights on how the future could be and what measures and budget that is sufficient for the organisation to weather the pandemic or even growth.
Vikas Ralhan: Finance function has evolved from book-keeping & financial analysis to the strongest business enabler where their agility has seeded them at core of business support. A journey from ‘Why’ to ‘How’, eventual mindset shift to ‘Let’s figure out’ approach is welcoming and long-lasting. An old-school accountant who had deep faith in paper-records, in-person discussions and micro-monitoring will either pivot to Cloud-tech based tools (ERP, Meetings and Storage) or likely to evaporate in COVID history books. Another paradigm shift among junior to mid-senior executives is to acquire new skills to stay-relevant in next-normal world such as data-science, cloud security, high EQ ~ people skills and ROI mind-set.
Are any of these likely to be permanent changes? When do you expect things to return to “normal”?
Vikas: Changes brought-in during COVID are here to stay and has long term impact. Covid has functioned as the strongest catalyst to kick-off leap-frog transformation.
Rajat: As function most of them will stay but will ease out with the recovery in business, as department will have to adopt with new business requirement. But the learnings will stay on permanently. It will take some time to return to “normal” as recovery will be very cautious. It is difficult to time but will take at least two years.
Alvin: This change in attitude is definitely here to stay and it will be a new “norm”. When cash was cheap and easily available, the level of concern for this was not that high.
Hafiz: For the Finance teams that can step up during this period, it will continue and be a permanent expectation going forward. It is a good opportunity for Finance to showcase what they can do in terms of value creation and move up the value chain.
Any other comments on the Finance function during the pandemic / recession?
Alvin: We have also discovered that the Finance function can definitely function working from home. Besides financial institutions requiring original physical signatures on documents, every other things can be done remotely.
Vikas: Among all, Finance is a leading function to adapt remote work culture and operate at pre-COVID levels of productivity. Finance executives could manage unprecedented uncertainly and complexity better than any other enabling function.
Hafiz: While Finance involvement in the business would be higher in this tough period, I would urge finance leadership to see this as an excellent opportunity to reset and plan for the development of the finance teams. There have been a lot of discussions around future of finance, business partnering, etc but getting it imbued in the organisation and providing the right skills training is still a catch up game.
Vikas Ralhan is a CFO and Angel Investor based in India. He has 16+ years finance experience across various industries in MNCs and start ups.
Rajat Gupta is a senior business and finance executive based in Singapore. He has 15+ years experience in industries including shipping and technology with established companies and start ups.
Alvin Tan is a C-level executive and finance leader based in Singapore. He has experience in shipping, business consultancy and big 4 firms.