CFOs and Economic Uncertainty

CFOs and Economic Uncertainty
Five Tips to Help CFOs
Beat Economic Uncertainty

Alessandro Evangelisti, ERP Sales Development Leader at Oracle Italy


Navigating a volatile market takes more strategic planning, collaboration, and a bit of bravery

2016 has been a year of considerable upheaval for businesses. The Brexit vote in June added to what had already been a volatile year for markets and made future economic conditions even harder to predict.

We have moved into a time where change has become the new norm, and whether companies come up against a major political event, sudden economic downturn, or demographic shift they must be quick to adapt. They are therefore leaning more heavily than ever on the CFO to help them achieve this.

CFOs accept that the future is uncertain, but they also know they cannot wait things out until the haze lifts. Encouragingly, Oracle’s research found that nearly half (46%) of finance leaders plan to invest in growth where they see a strong business case, even if they are being more cautious.

This is no easy task. How can the finance department rein in costs without adopting too severe an austerity footing that makes growth impossible?

Plan for a change of plans

 Many companies rightly view driver-based modelling as the best approach, but it’s just as crucial their models are based on input from as many people as possible .  

When the future is unclear, your plans cannot just be linear. They need to fork into multiple branches so that any eventuality can be taken in stride.

Finance teams need to be able to model and test many scenarios quickly and with a high degree of integrity. Only then can they can develop a robust plan for each possible outcome.

Many companies rightly view driver-based modelling as the best approach, but it’s just as crucial their models are based on input from as many people as possible. CFOs get a much more complete and accurate indication of how the company will react to different market conditions when insight from sales, marketing, HR and the rest of the business is combined with financial data.

Galvanize the business

 As the brokers and validators of company data, CFOs must develop the digital knowledge to understand LOB data .  

For a company to invest more strategically, every line of business (LOB) must be aligned. The modern CFO sits at the junction of LOB operations. Taking on the role of ‘data impresario’, their unique oversight of each department’s performance makes them ideally placed to ensure LOB strategies are in sync with the organization’s wider ones.

Oracle’s research found that 56% of finance leaders are working more closely with lines of business, and this percentage will no doubt rise as companies continue to modernize the way they work. As the brokers and validators of company data, CFOs must develop the digital knowledge to understand LOB data . Just as crucially, they must be able to collate and clearly present their insights to decision-makers in the boardroom to help inform business decisions.

Become self-aware

 Today’s profit and cost management solutions allow organizations to build, maintain, and analyze cost allocations at a more granular level.  

Businesses today need to work more efficiently. This takes a certain level of self-awareness – improvements to the way they manage their resources and cash hold the key to cost savings and time gained.

The problem is that many finance systems are fragmented and provide poor visibility into LOB performance. This makes it hard to understand where improvements can be made.

Today’s profit and cost management solutions allow organizations to build, maintain, and analyze cost allocations at a more granular level. They also make it possible to automatically calculate cost, profit, and other core KPIs so companies can gauge performance and modify their processes accordingly.

Conquer change through better risk management

Risk management isn’t only about knowing how to play it safe. It’s also about knowing how and when to take chances. Forward planning is a key element of mitigating risk and capitalizing on opportunity, and 53% of finance leaders admit their role today is more focused on future strategies than ever.

With a standardized process for identifying, monitoring and responding to threats the business can take action earlier, thereby minimising their losses. It’s also important that potential risks are made transparent to business leaders, who may not have the analytics expertise to dive into the relevant data themselves. Being able to track and summarize risk audits in easy-to-read dashboards allows the company to take swift, well-informed action.

Be bold – fortune favours the brave

Being called upon to take the lead on strategic investment and growth in a post-Brexit market puts a great deal of pressure on CFOs. 53% of finance leaders say more is being asked of them now than in the past. However, those that rise to the challenge will prove invaluable to the business. 46% of finance leaders admit their job has become tougher, but the same percentage is also getting more recognition for their efforts.

Tougher times have put more pressure on investment and decision-making, elevating the role of finance and placing CFOs at the heart of business strategy. This is by no means a time to be reckless, but those finance leaders who help companies navigate change with authority will be instrumental in securing their continued success.


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