In Hindsight: How are CFOs Preparing for the Future of Finance?
Investing in the firm’s future is non-negotiable for CFOs. Thriving in this new world, we experienced substantial industry changes that gave us a sneak peek of what the future of finance looks like- and they’re here to stay.
From the risky withdrawal of the UK from the European Union to the abrupt blow of the global crisis, unprepared businesses plummeted to a terrifying economy where survival chances were slim. Whether you're an organisation that graciously waded through the downturn, or you’re among the ones who are caught off-guard, it’s time to get the ball rolling and build an agile strategy to succeed in this uncharted territory that is the new future of finance.
Factors affecting post-crisis working environment
We first look into the essential concepts that define the industry’s horizon in the near term, and possibly, the long term.
Technology alone is insufficient
Prior to the pandemic, there have been stable plans about establishing bigger IT initiatives for businesses to keep them up with the industry’s pace, but dramatically receded in the previous year.
CFOs and digital transformation initiatives led the transformation of the entity, themselves included, to a paradigm shift where they elevate their former focus. From lucrative finance efforts to value creation, investment in technology is becoming a major step in elevating the new business environment.
However, if not done the right way, the enterprise will be deemed futile. It will be hard to maximize tech to its full potential without harnessing human capabilities.
There’s a widespread talent scarcity
There is a different kind of war for talent going on these days. CFOs are struggling to find the balance between meeting rising employee demands and to what extent the management is willing to concede to these expectations.
The labor market became rather aggressive after the flexibility and convenience they gained during the pandemic. Further intensifying this is the extensive shortage in talent that gave them an upper hand in negotiating their employment options. According to Bloomberg, recruiters are looking at increasing wages albeit it pushes up against the UK’s worries of inflation.
Retention is also a projected issue nowadays in workforce management. A Microsoft survey of more than 300,000 global professionals revealed that 40% of this population considers changing and leaving their current job this 2021.
Fluctuating consumer demands
Aside from internal changes happening, consumer demands trail the list of concerns for CFOs.
Consumption shock swept across various countries on the eve of the pandemic, and continues to upend with the present situation. Constraints such as health concerns and lockdowns affected people’s buying habits, which in turn impacted what they buy and how they buy it.
There has been a significant shock to loyalty among a number of consumers. McKinsey reports that people are trying to explore new shopping behaviors, and that 30 to 40% of this population are more likely to switch brands and pursue this fad moving forward.
Thriving with the ideal assets and structure
The crisis created a new realm for businesses to explore. And to better fit the finance arena into the firm’s strategic vision, CFOs need to learn how these concepts work together, and how they collaboratively bring the best results to the table.
Technology and workforce
It goes without saying that harnessing the power of these two brings out the best assets CFOs can ever find.
Developing finance technologies are positioned around the human potential so there will be a higher layer of collaboration that unleashes a never-seen-before value. It further unlocks new roles for accountants, which requires them to upskill and stretch their proficiency.
A pivot in operational finance is also expected as we evolve into more touchless processing, decentralised functions, and real-time data generation. Hence there will be a shift in the core focus of the finance department from cost-efficiency to high-value strategic responsibilities that drives smarter decisions for CFOs.
Technical expertise and industry knowledge
The exponential growth of technology in finance requires the technical ability of accountants in handling transformative machines, including the application of cloud platforms, artificial intelligence (AI), blockchain, and RPA in their profession. With the right expertise, they can leverage this to produce foresight rather than hindsight and provide insightful analyses to the management.
Increasing compliance updates are also creeping their way up to the list of concerns for CFOs. But with the help of regulatory bodies, getting a grasp of these laws can be tolerable. Having F&A professionals equipped with extensive knowledge in the industry regulations, mastery in accounting, plus the technical skill bodes well in the reshaping of the team.
Organisational model and synergy
Gone are the days when strategic plans were static and slow-moving. In today’s ever-changing space, you should know how to build a resilient workforce that adapts well to changes. Organisational models need to have the agility to embrace continuous updates and planning. Perpetual disruptions call for a rapid business decision, which is delivered through provided foresight.
While CFOs take the higher road in managing both the financial and strategic facets of the business, they also gradually create a beneficial synergy that maintains the balance between financial projections and planned steps. To put the business in more holistic development, it will be critical to recognise the dynamics of the two and use them in your best interest.
Bridging the organisational gaps
Financial silos align the enterprise masterplan, and therefore comes off as a cross-functional collaboration with the rest of the departments. Here are the gaps you can consider closing for a more intact action plan.
DEI approach and management support
Diversity, equity and inclusion (DEI) is acquiring a lot of meaning as companies take different approaches to imposing the program. There was no significant support for DEI before the pandemic, but now that it has become an essential part of the workforce, CFOs are tasked to understand how their respective companies are employing DEI, and report its progress to stakeholders. What are your firm’s strategies in approaching DEI? How do you support its values? Note that a properly imposed DEI plan translates to a better talent brand- making you a top choice for potential employees.
Company culture and hybrid arrangement
Building on the DEI approach, company culture comes next in the running.
The transition to a hybrid workplace raised concerns about keeping employee morale and overall well-being. Some host virtual activities for their employees such as team building, catch ups, and one-on-ones to keep them in the loop with what’s happening.
Keeping your people engaged in this WFH setup is a must to elevate their productivity levels, and retain them in your team.
Employee wants vs. employer capacity
As mentioned, there is ongoing distress about meeting employee demands in the post-crisis phase. There have been qualms about whether to raise wages and benefits to accommodate more talent in the company. However, employers can only stretch so much to cater to these needs, as work-from-home arrangements also incur additional expenses such as office equipment, programs, and software.
If this talent shortage continues, this can curtail their near-term plans for the firm.
CFO as a catalyst of change
The role of a CFO integrating strategy and finance is a colossal responsibility no ordinary professional can handle. Championing the finance and strategic functions has a certain immensity to it, and CFOs proved that they can take on new responsibilities in a quicker way.
Aided by the digital transformation of the finance function, the entity shapes up to be a proactive organisation that can thrive even in unprecedented circumstances.
CFOs with a good sense of business acumen reinforce the resilience of the enterprise. With a strong financial foundation and flexible planning, you can confidently face the future of finance and create a new path towards enduring success. As Albert Einstein preached, ‘you can’t use an old map to explore a new world’ so better buckle up for what’s coming ahead.
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