Challenges and Obstacles that are keeping CFO up at night
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CFO’s Challenges and Obstacles
Working with data for reporting, analysis, and providing forward-looking insight is in the DNA of the CFO. Finance executives are required to progress to the next level, guiding operational and business units such as sales, marketing, supply chain, and human resources to achieve better operational and financial performance. To become a data-driven intelligent, intelligent financial organization, the CFO must understand how to deal with technology, people, and process viewpoints. Finance organizations that are both intelligent and thoughtful investments in both tools and people. All of these factors combine to form a critical setting that a CFO must adhere to. CFO’s challenges and obstacles – Cyber Security, Accelerating Digitalization. Hiring & Retaining Talent, Forecasting amid uncertainty.
Liquidity Concerns
CFOs face one of the most significant business difficulties during the coronavirus pandemic: liquidity maintenance. The lockdown of essential areas of the global economy has led to decreased revenue for hotel operators, airlines, merchants, vehicle producers, and many other companies. Businesses are also negotiating disturbances in the supply chain and rising costs of moving to remote work. Liquidity management is a priority for every organization during a recession or economic uncertainty period. CFOs and financial leaders in 2021 are looking at investments to reinforce a wide range of cash management tasks, including spending control and revenue management.
Remote Work Culture
The COVID-19 pandemic has brought virtual work for many financial departments, which generally requires all hands on deck. For CFOs, this new aspect has also produced new leadership problems, from adjusting decision-making to a virtual environment to define performance goals.
This is also not a short-term experiment. As companies struggle to reopen safely, it is evident that transition to virtual can have a permanent impact on where finance works and, perhaps more importantly, how it works. Three-fourths of respondents expect more of their overall employees to work remotely. And 72 percent of respondents predict that more funding will be carried out remotely after the crisis. forecasting amid uncertainty.
Accelerating Digitalization
With 97 percent expecting to accelerate digital technologies in 2021, CFOs play a key role in leading their firm towards digitally-driven growth. If senior finance managers grasp the technology necessary to develop the organization, their company will advance on digital transformation twice as quickly. Successful financial executives will examine and invest in their knowledge portfolio and recognize that these choices will affect future technological decisions.
Cyber Security Threats
In particular, financial teams are vulnerable to cyber-attacks. This is why CFOs need to become conversant with new IT security risks and legal frameworks. Infringements of cybersecurity have become the financial hazard that firms face, making it imperative that CFOs play a pivotal role in risk management. National and corporate cybersecurity is the world economy’s greatest threat in the next ten years. The risk of an assault includes immediate financial consequences, significant regulatory fines, and consumers, employees, and suppliers’ loss of trust. It can also be systemic and affect several companies and supply networks. Regulatory standards for cybersecurity organizations have become stricter in many countries, and CFOs must enforce and report dangers to their companies. Therefore, CFOs should periodically discuss cyber-risk exposure.
Data Privacy Concerns
As the quantity and severity of cybersecurity infringements have increased, there are also issues over data protection and privacy. As companies deal with these growing concerns, many risk mitigation strategies reach finance leaders’ offices. Finance teams play an essential part in strengthening the security and privacy capabilities of business data. Leading CFOs are using creative techniques to assess, measure, articulate and optimize investments in cybersecurity. Moreover, CFOs must understand their skin in the cybersecurity game because it is necessary to keep attentive to the potential for personal attacks.
Hiring & Retaining Talent
Amid the epidemic, organizations must be highly strategic to recruit fresh talents to their business. Making a new hire that will not influence the bottom line can cause significant problems along the road. One strategy to alleviate new recruitment errors is to give the CFO a seat at the recruitment decision table. When hiring comes with multiple hurdles and dangers, the CFO may be a helpful partner to HR departments.
CFOs can supply complex measurements lacking in the HR department, supplemented with data-driven recruitment technologies and HR analytics. While HR knows the recruitment process more, the CFO can readily detect the trajectory and financial position of the company by just reviewing the organization’s financial data. With the bird’s eye view of the effectiveness of an employment strategy, it is easier to detect faults in the recruitment process. A CFO should help steer the HR department in increasing workforce and productivity trends in strategic employee planning and workforce predictive analysis.
Driving Automation
The functions of the Chief Financial Officer used to be strictly limited. Typically a licensed accountant, the job of the CFO was to lead the financial department of a corporation. These tasks, which included accounting, record keeping, management information commonly produced, financial reporting, legislative compliance, and supervision of treasury operations, set out the limits of the CFO position.
In the medium past, however, this has changed with the increasing role of IT. The financial function is a significant producer and user of economic data, and therefore, the CFO must understand IT, its usage, and application more closely; the work has become digital. The launch of the cloud, big data, and digital currencies has helped create a new era of financial management, processes, and technologies. Because of contemporary issues facing businesses, the digitization of the finance function has become crucial and allows CFOs to make a far more considerable strategic contribution throughout their enterprises.
Sustaining the Recession
The global slump may appear to provide an unparalleled chance for corporations with sufficient resources to purchase assets or capture market share on attractive terms. Many non-financial enterprises are well-positioned to do so since they enter the current crisis with more robust balances than in earlier recessions when corporations that have adopted counter-cyclical patterns of use and cash expenditure have gone much far beyond the strictly defensive. forecasting amid uncertainty.
In this context, the function of the Chief Financial Officer becomes crucial. To understand how pricing volatility and demand affect the success of their organizations, CFOs must use their in-depth grasp of financial and liquidity to manage possible deadly risks and ensure the availability of the financial resources required for counter-cyclical initiatives. The majority of CFOs will have to replace traditional budgeting and planning methodologies with a more active approach, supported by a review of past earnings and growth expectations and how profound the downturn would be. CFO’s challenges and obstacles.
Driving growth through Innovation
CFOs have traditionally provided control and compliance supervision. In the previous decade, however, the job of CFOs became a strategic partner for the larger Executive Team and provided an insight into the growth planning process of the organization. CFOs have long led in traditional functions such as cost reduction and supervision of regular business control, compliance, and reporting aspects. In the past, CFOs would have to spend a considerable lot of time on rotary work responsibilities, such as regular reports and book closure. CFOs have now overcome the barriers that assist them in advance in terms of project scope and challenges using technology and Innovation.
Forecasting amid uncertainty
The COVID-19 pandemic and many of its effects, including oil prices shock, company shutdowns, and enormous health dangers, have caused policymakers unprecedented uncertainty, making many of the current operational and strategic plans useless. Faced with so many unknowns and unknowns, CFOs need to refine their prevision capabilities so that their organizations, including the decision to expedite recovery and investment, plan for their future impacts and prospects. forecasting amid uncertainty.
Effective financial projections for the pandemic require a broad strategic outlook on critical risks, effects, and opportunities for the company. It’s crucial that funding is not isolated, even when financial implications and options are the emphases. CFOs can set up a COVID-19 forecast consultation team including key leaders, including marketing, sales, financing, the supply chain, HR, and IT. CFO’s challenges and obstacles.
Collaboration and driving selection are two critical parts of the scenario-driven prediction process that CFOs and their firms may use to recover from COVID-19 economic shocks. forecasting amid uncertainty.
Communicating with stakeholders
CFOs have to develop good connections with the CEO, the chairman of the audit, the board of directors, peer executives, and employees as their agendas progress. In the absence of any such relationship, the vitality of a CFO often drains. If these relationships are not balanced, the CFO’s very agenda can be hampered.
CFOs can choose the appropriate methods for influence by knowing what their key stakeholders want. Some coins are often available to the CFO, for instance, the capacity to contribute resources, such as people or investment funds in a stakeholder’s agenda or better access to information or reactivity to support decision-making. Similarly, alternative currencies can be helpful but must be nurtured—such as close links with the CEO or other key players that the stakeholder can appreciate. CFO’s challenges and obstacles.
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