Amid a turbulent global economy, the pressure upon the company’s Chief Finance Officer has been overwhelming, to say the least. The unprecedented market conditions have forced most CFOs to rethink and adjust their financial strategies on treasury structures and liquidity positions, among others, and are now compelled to focus on working capital efficiencies -- all these, to ensure that they, the CFOs, continue to drive productivity and bottom-line performance.
Clearly, at no other time is the CFO much more intensely challenged. From all indications, the cause for serious concern could extend for many more quarters, somewhat pointed towards the end of next year. CFOs around the world are hoping for a thaw in the credit markets. That it seems not likely to happen is kind of baffling to many, considering that, as a consolidated response, central banks around the world have already been flooding financial markets with cash while governments have launched their own monumental fiscal spending plans.
Beyond the sheer hardcore accounting and financial reporting, the CFO’s ability and penchant for predicting the future has suddenly become indispensable, if not altogether compelling.
Additionally, the CFO’s stability under pressure is now put to a severe test. Today’s CFO, while relentlessly besieged from what is happening in the financial world, is now probably much more appreciated than ever before. The Board depends on him inevitably to co-pilot the ship in tandem with the CEO, who, in turn, must count on him to help manage shareholders’ expectations.
CFOs admit that they cannot spend more than half of their time on day-to-day accounting operations and routine problem resolutions. Instead, they know they must focus on managing risks and driving better decision-making across their companies. The range of issues that the CFOs must deal with is almost staggering; such as the highly volatile economic developments, changing political and social environments, changing local and international market economics, continuing diverse new regulatory requirements, the war for talent, and advances in technology infrastructure, among others. Throw into this pot the current global financial crisis and we see an array of factors that could only demand focus, agility, superior analytical skills, decisiveness and yes, stability under pressure, from CFOs.
So, what are the skills that CFOs must have to successfully navigate the turbulent global business world? A CFO’s first responsibility is to build a thoroughly reliable accounting infrastructure that can be depended upon to consistently execute the financial accounting and control requirements. Once that foundation has been set, his time is no longer expected to be spent on such basic and routine tasks. But only on condition that he could provide total assurance to the CEO, board and other stakeholders (and yes, the regulators especially) that the financial processes are sound. That done, he can then step into the CFO’s true value-adding role, which are those of managing and mitigating risk and contributing context and insight into business decision-making across the company.
Given the treacherous state of affairs that continue to evolve in the financial world, companies’ top managements have begun to look for a broader range of attributes in their CFO, a few of which come under the following categories:
· More than ever, a global perspective but with strong sensitivity to local trends.
· Acute awareness of risk including non-financial risks either emanating from or related to environmental risks, company reputation risk, and technological risks
· Ability to design or device scalable financial processes that can respond to rapid changes in business volumes or even core business models
· Ability to identify, recruit, develop, and mentor top-flight finance professionals who are comfortable operating in a volatile, global market
· Ability to discern new business opportunities from crisis situations
Again, at no other time has the strategic role of the CFO come to the fore. His ability to analyze both internal and external trends and events enable him to contribute critically to the formation of company strategies and their execution. He is clearly an indispensable advisor to top management which only paves the way for him, from a career track standpoint, to step into the CEO’s role, should such opportunity present itself.
CFO Noel Rapadas of the prestigious Ortigas & Company, who has been credited with contributing in no small measure to the major turnaround in his company, when asked about the essential skills of a CFO, has condensed them for us when he responded: “I would say, practically every quality that will combine to enable him, the CFO, to predict financial performance, maintain asset liquidity and speed up the company’s progress”.
Indeed, companies who are impacted by the onslaught of the global financial crisis which has wreaked havoc on many economies and has caused widespread recession would have to turn to their CFO for much of their quick fix solutions and more importantly, strategies for the long haul. With all the many things expected of the CFO, there is probably just one more we could ask him to do: well, maybe leap tall buildings!