2016 was the year everything changed and CFOs found themselves centre-stage on a myriad of issues.
In June the UK’s decision to leave the European Union destabilised money markets leaving economic and business uncertainty in its wake.
Cyber-attacks on large companies like TalkTalk and Tesco Bank demonstrated the vulnerability of customer data and the need for active risk management to avoid the ramifications of data breaches on enterprise value.
There were yet more sleepless nights for CFOs by November, following Trump’s surprise victory in the US. Early indications signalled bad news for British exporters as the president elect confirmed his intention to quit the Trans-Pacific partnership from his first day in office.
With these complex macro-economic issues providing the backdrop what are the Top 5 CFO Challenges in 2017?
Managing risk in 2017 means facing the uncertainty associated with domestic and international economic conditions and turning it into growth opportunity. To do this CFOs need to have a growth strategy mindset (as opposed to cost reduction) and be able to respond quickly to volatile market environments, using the most appropriate tools and technologies.
Top risks to manage in 2017 as reported by CFO magazine 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 and company 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.
Managing evolving technology
The finance function is changing and new technologies have allowed for increasing levels of finance process automation. As a result, internal finance operations have been transformed.
However CFOs realise that managing evolving technology is not just about streamlining operations but is now also essential for managing fraud detection, regulation and compliance.
In this new era, where finance is the key collaborator to the business, digitisation provides the data analytics needed for critical decision making and to evaluate and discover incremental business opportunity.
Changing regulatory environment
When it comes to regulation the only thing of certainty is change.
Brexit inevitably heralds more regulatory change for UK businesses. Although timings remain unknown, given the withdrawal from the European Union is likely to take years to complete.
According to Business Insider UK, regulatory compliance still worries 45% of CFOs. This looks set to remain challenging territory. Nearly one third of CFOs reported that they were worried about being able to keep up with changing government regulations.
Talent management and retention
Finding and retaining the talent needed to drive finance teams sits firmly amongst top CFOs challenges in 2017. From improving performance and developing existing staff, to making new strategic hires capable of helping fulfil the digital agenda.
For the finance team to step up and contribute as strategic partner to the wider business, CFOs need a clear view of existing talent, skillsets required for the future and a succession plan to ensure key roles are always covered.
Goals for 2017
2017 will be another challenging year for CFOs, with companies relying ever more on their input to grow and thrive. In order for them to fulfil this role they need to achieve two key goals in 2017.
Creating actionable information from raw business data
In a survey by CFO magazine 70% of over 380 finance executives polled said that supporting decision making is their number one goal for 2017. This marks a move away from traditional finance objectives of the past. 90% say they need to do more with financial and operational data to help top management make critical decisions. These findings support the view that CFOs are indeed morphing into business advisers.
Agility remains a top goal for 2017 but the same CFO survey reports only 23% of respondents had confidence in their company’s ability to manage unforeseen business obstacles, due to outdated financial planning and analysis tools and processes.
An over-reliance on Excel, inefficient reporting and lengthy budget cycles stand in the way of agility. Surprisingly more than 50% said that it took longer than three months to complete a budget.
CFOs polled said that being able to pull data from multiple sources into a single report would greatly improve productivity and agility. As would the ability to produce better dashboards and data visualisations.
Winning companies in 2017 will be those who can ride the wave of economic uncertainty, dodge cyber-threats and use their data and their wits to exploit new opportunities.
In 2017 the CFO needs to be a real multi-tasker. Their ability to embrace change, champion new technologies to support growth and efficiency, and act as trusted advisor to the board – whilst overseeing the day job of managing cost and profitability – remains the biggest challenge of all.