Understanding CFO priorities: Strategy and budget

CFOs are playing a game of strategy and budget

If the dramatic twists and turns in the world of finance over the last few years have taught us anything, it's that being prepared for the unexpected is no longer just a nice-to-have option. With ever greater auditory burdens, changing regulations and a drive to find greater efficiencies in finance departments, failing to prepare is no longer acceptable for businesses.

Our interactions with finance managers suggest that improving economic conditions mean strategy and budgeting are going to be top of the list for CFOs priorities over the next few years. The findings of a Protiviti Finance Survey lends weight to that impression and also supports a number of other trends that portray a positive outlook for the economy.

Why strategy and budgeting?

In a recovered economy, it's no surprise that CFOs priorities are trying to establish greater clarity on working capital and cash flow by improving business and competitive intelligence in their finance functions. There has been a shift in attitude over the last 12 to 18 months whereby businesses have gone from seeing working capital management as a defensive activity to seeing it as a way to optimise their ability to capitalise on opportunities. Being able to analyse data and forecast outcomes that could affect businesses positions in the market quickly and accurately are crucial components for this.

Reflecting a shift in CFOs priorities, their focus, is moved to investing more time and resources into strategic planning, periodic forecasting, budgeting and profitability analysis than ever before in order to maintain an ongoing, real-time picture of an organisation’s financial health. Improvements to working capital management are being supported by a greater focus on digitising finance, implementing better systemised processes that cover different parts of the business in a more efficient and coordinated manner.

Some of the other specifics highlighted as priorities by the Protiviti survey were period-end close, cash forecasting and account reconciliation which were all rated as “significant” along with working capital management. However, with finance managers and CFOs priorities already focused, this year can be boiled down to strategic planning and budgeting.

Other trends painting a positive outlook

The close attention being given to businesses’ performance management and financial forecasting underline expectations about a more positive economic outlook. This is supported by two other trends that have been bubbling to the surface in the finance functions of businesses, namely, talent acquisition and an emphasis on soft skills.

Talent acquisition is tough as the market for top performers is highly competitive. The usual analytical challenges are growing with the rising importance of big data. Meanwhile, technical capabilities must cover evolving regulatory issues, changing accounting standards and ever more complex cross-jurisdictional issues.

Finally, the understanding that business is all about relationships is becoming more pertinent to even non-customer facing departments in businesses.  CFOs and finance managers are becoming increasingly aware of this as they grapple with issues such as managing regulator relationships and working more closely with other areas of the business. Soft skills such as communication, leadership and mentoring are therefore becoming more valuable even in technical areas such as finance.

With budgets and strategy as CFOs priorities, finance managers should not overlook the impact of how having the right skilled professionals on board can affect the business. Specialist finance professionals with strong technical abilities and exceptional communications can offer businesses support to reach their goals for growth.