How CFOs and their teams manage uncertainty

The CFO and their teams step up in times of uncertainty 

The role of the CFO is changing, so that they are no longer valued only for their accounting and financial knowledge, but also for their ability to facilitate and energise the irreversible process of digitalization and improve the company’s internal processes.

According to a report by the consulting firm McKinsey & Company, the new mandate of the CFO is to master change, in an era of maximum uncertainty and drastic changes that occur in a turbulent and accelerated manner.

To perform this role and ensure the survival and growth of their companies, the CFO needs to improve control of the company’s internal processes, and must not only adapt to technological changes, but also enhance them, in order to gain or maintain a competitive advantage.

In today’s turbulent times, business software has become the backbone of a large company and the CFO needs a reliable tool that allows them to obtain standardised information quickly, both from the parent company and from any subsidiary. Thanks to these reports, the company’s management will be able to make decisions without delay which can mean the difference between growing and staying in the market, or on the contrary, languishing until having to close down.

Main functions of the Chief Financial Officer or CFO

Among the main functions of the CFO we can highlight the following:

• Ensuring that the accounting reflects a true and fair view of the company or business group. The CFO is responsible for supervising the closing of the company’s annual accounts, ensuring their conformity, reliability and regulatory compliance. In particular, they must ensure that national and international accounting standards are complied with.
• Leading the team in charge. In large corporate groups, the CFO may supervise the activity of the financial directors of subsidiaries or divisions, directors or chief accountants, controllers, etc. In smaller companies, he will supervise the team of accountants.
• Knowing and implementing technological solutions that enable the company to respond quickly to rapid changes in the environment. In this sense, more and more managers are introducing business intelligence (BI) and artificial intelligence (AI) tools.
• Digitalising finance. Finance leaders must be involved in facilitating the adaptation to digitalisation, especially where digital and finance intersect.
• Rely on software and technology to reduce routine tasks and free up time for greater control over particular processes and the business in general. In this sense, the use of Financial Performance Management (FPM) software helps clarify financials and provide consistent and reliable consolidated financial statements that facilitate transparent financial planning and quick decision-making.
• Strategic leadership. The CFO is a strategic partner who must exercise the strategic leadership of the company alongside the CEO, providing accurate financial reports that allow quick and timely decision-making for key areas of the company.
• Facilitate the financial consolidation process. The CFO must facilitate the financial consolidation process and ensure that it is carried out correctly.
• Ensure proper compliance with tax obligations. Although the CFO may not be an expert in all types of taxes, they should know the main tax obligations and have in their team the professionals that guarantee the correct fulfilment of these obligations with the Treasury.
• Investor relations. According to the consulting firm McKinsey & Company in a survey of CFOs of various companies, almost two-thirds of the respondents claim to have investor relations among their functions.
• Greater involvement in environmental, social and governance (ESG) issues. This involvement is necessary, as investors are increasingly interested in these issues, especially since the pandemic started.
• Actively participate in organisational transformation. This role of the CFO is necessary to improve performance and enhance digital initiatives.
• Managing mergers and acquisitions. Mergers and acquisitions, known by the acronym M&A, is a function that CFOs are often responsible for or actively involved in.
• Planning of economic and financial needs. The financial management must determine the economic and financial needs of the company that emanate from the Strategic Plan, preparing the company’s annual budget.
• Negotiate with financial institutions to secure the necessary financing for the company under the best conditions. Once the financial resources needed to meet the operational and strategic plans have been determined, the CFO must negotiate with the financial institutions the banking conditions of the financing.
• Relationship with the auditors. The CFO should be in contact with the auditors for any clarification and collaborate with them as necessary to enable them to issue the audit report.
• Supervise the use of financial resources. Among the tasks of a CFO is also to ensure that the company’s financial resources are used rationally and according to the defined objectives and planning.
• Define economic strategies. A CFO must establish medium and long-term strategies to identify financial opportunities and project the evolution of investments.
• Seek the best alternatives for investing the company’s cash surpluses. The CFO must plan, implement, supervise and analyse both the viability and profitability of the organisation’s investments.
• Facilitate the company’s reporting. The CFO must ensure and facilitate reporting with the main KPIs to the different managers of the company.
• Communicate financial information. Not only to the CEO, but also to the different functional directions of the company.

According to the McKinsey survey the CFOs surveyed say that digital and information technology (IT) investments have paid off, with six out of ten reporting a positive or very positive return on investment (ROI) from investments made in these tools. Among these investments, respondents highlight the data visualisation and connectivity provided by tools such as real-time dashboards with key performance indicators (KPIs).

LucaNet offers user-friendly software and competent consulting for Financial Performance Management. Solutions for consolidation, planning, reporting and data management greatly facilitate the complex work of CFOs, controllers and group accountants. The 3,000 customers in more than 50 countries confirm this fact.