Mastering Strategic Finance: Today’s CFOs Sets the Standard for Efficiencies

The negative economic news keeps on coming.

Post covid, inflation is out of control (currently at), global energy prices are on the rise, and even well-known fast-growing companies (including Klarna and Tesla) are shedding staff due to the likelihood of a recession.

On a local level, the UK has problems of its own. In June, the Organization for Economic Co-operation and Development (OECD) announced that they expect the UK to go from being the second-fastest growing economy in the G7 to the slowest. They predict growth will slow down from 3.6% this year to 0% in 2023. 

Further complications are also added by uncertainty around the UK’s Northern Ireland Protocol and related issues around goods flowing from Great Britain to Northern Ireland.

To cope with these issues and still demonstrate growth, CFOs need to be resilient and introduce efficiencies for their organizations to be sustainable and thrive. 

Hiring Challenges

It’s a buyer’s market for high-quality accounting and finance staff seeking to change jobs, so CFOs need to retain existing staff and avoid hiring additional and more costly headcount. 

A recent survey from recruitment firm Robert Walters showed that accountants’ salaries have increased by as much as 20% in January 2022.

Bobby Lane, CEO of Factotum, a multi-disciplinary outsourcing practice helping business owners focus on what they do best by providing them with accounting, HR, IT, marketing, and everything in between, says:  

It’s been one of the most challenging hiring environments I have witnessed in my career. Even when you have an offer accepted by a potential employee, they are being countered by their current employer as replacing staff is proving difficult for everyone.

Bobby Lane | CEO, Factotum

As well as salaries going up, he notes that you now also have to “sell the opportunity, company, and role to potential employees.”

Jay Dias, Managing Partner at Leela Capital, an advisory and investment firm, thinks that expectations around ways of working also need to be considered when attracting talent:

We see this topic being more important than salary expectations as it varies through levels within finance. We consider that data processing roles can be done remotely, with junior analysts needing to be in the office, and more senior hires being hybrid.

Jay Dias | Managing Partner, Leela Capital

Invest in Tech Tools to Drive Efficiencies

Investing in tech tools for the finance function can effectively combat increasing salary costs due to enabling existing employees to be more productive and free them to do more value-adding work and limiting the need to increase headcount.

Finance tech tools are now becoming affordable to the mass market due to the plug-and-play nature of cloud-based software and API integrations that can be set up quickly and easily.

The huge advances in finance-related tech tools have made it possible for SMEs to implement systems that would have previously only been available to large companies. This has meant that processing can be automated, reducing the cost of both people and time in running their businesses,” says Lane.

Asif Ahmed, Managing Director of Acclivity Advisors, a boutique advisory firm, suggests that, at a minimum, companies should use tools to “upload invoices and match them directly to live bank transactions” due to this being a common and straightforward feature for most vendors. 

Those further along their automation journey should consider implementing end-to-end payables automation tools, from onboarding suppliers to reconciling bank payments, freeing up staff, and driving real-time data. 

Balancing Priorities 

The economic outlook requires CFOs to balance competing priorities including managing day-to-day financial processes and reporting and providing insights and driving strategy. It’s a tricky balancing act to fulfill both responsibilities successfully, and failure to deliver accurate and timely management information will limit the ability of finance leaders to provide commercial value. 

Bobby Lane thinks that efficiencies from automation tools enhance the ability to deliver a robust reporting function that puts finance leaders in a better position to drive insights:

Automation and finance technology has helped provide many of the tools needed to support these new responsibilities. Decision-making can now be made rapidly.

Asif Ahmed believes striking the right balance between the two is unique to every business:

Priorities will differ in every situation. First and foremost, it’s crucial for the finance leader to have a firm grasp of what the critical success factors of the business are and to ensure their role is aligned to stewarding those. Once this has been established, the right focus will tend to flow quite easily.

Asif Ahmed | Managing Director, Acclivity Advisors

Demonstrating Sustainable Growth 

It’s critical now for CFOs to grow their revenues and be self-sufficient by being profitable and not being forced into a position to go out and raise finance.

Economic uncertainty means the Venture Capital (VC) market is not as buoyant as it once was. The number of new VC firms in the UK dropped by two-thirds last year, and Sequoia, a leading Silicon Valley VC firm, recently sent an email to their portfolio companies warning them that they may need to be ready to “pull the trigger” on projects to conserve cash and extend their runway. 

Jay Dias believes companies must demonstrate sustainable growth to combat the risk of having to raise a down round:

Whether this is at unit economics or at the operating margin, sustainable growth within European investment is even more important now because of the pressures they will see on valuation.

Drive Efficiencies to Be Agile, Manage Costs, and Respond to Market Conditions 

Driving efficiencies will put CFOs in a solid position to continue demonstrating growth. This can be achieved by pushing automation, maintaining the cost base, retaining key financial staff, and showing resilience for whatever comes next.

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