How To Be a Strategic CFO in Uncertain Times

by Ryan Van Hatten

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The last several years of the pandemic undoubtedly proved challenging for businesses, with many in certain sectors still struggling. Now, businesses are contending with navigating an economy in which numerous simultaneous disruptions are occurring – high inflation, widespread lay-offs and geopolitical tensions including the Russia-Ukraine war and ongoing trade pressures. Data from the National Association of Business Economics shows the odds of a recession in 2023 exceed 50 percent, with the U.S. economy expected to take a turn within the first quarter. 

It’s tempting in times of market uncertainty for organizations to go into survival mode and abandon initial objectives, investments and initiatives (e.g., product or service innovations, global expansion and/or sustainability practices). But to remain competitive and viable, it’s important for the CFO and other members of the C-suite to maintain sight of these bigger business goals, especially those in line with company values, to protect the brand and future growth potential.  

Here are three tips for finance executives to help lead their organizations through times of economic turbulence with confidence.  

1. Level up your FP&A team through technology 

Proactive planning can help finance teams be more prepared no matter the economic environment. McKinsey has found that “next-level FP&A teams” don’t rely on legacy processes like spreadsheets. Instead, these tech-savvy finance teams can increase their proactivity and consistency (key to managing the businesses income and spending in an uncertain market where cash is king) without adding substantial labor hours to the balance sheet.  

Corporate Performance Management (CPM) software minimizes human error, which can lead to costly inaccuracies that result from legacy spreadsheet approaches. CPM software empowers finance leaders to rapidly re-forecast using “what-if'' scenarios – like a possible recession – and manage projects much more effectively through KPIs and data analysis. It’s almost impossible to produce this kind of valuable data without automation and analysis tools in place. 

CPM software further allows financial teams to look back at their strategies and identify what was supposed to change, whether or not it did change, and if its impact was expected or significant. With KPI reporting features in CPM software, data points can be checked and analyzed with ease, enabling a more strategic and informed response in real time. 

2. Treat the business like it’s your own 

Financial leaders will be most successful if they adopt an “owner’s mindset” and take proactive steps to anticipate and solve problems. As businesses face economic headwinds and new challenges in the year ahead, simply going through the day-to-day motions of the job won’t lead to effective solutions. An owner’s mindset helps finance professionals dig deeper, since it’s the preemptive, well-considered choices that help a business flourish.  

Taking a rigorous approach to cash flow management is especially critical in the current market, and having cloud-based financial planning and analysis (FP&A) tools makes this possible by providing a single source of the businesses’ cash flow and spend in real time. With these critical insights, finance teams are empowered with strategic decision-making regarding the well-being of the business.  

The strategic CFO who has adopted an owner’s mindset will take a close and ongoing analysis of cash flow and spend one step further to solve problems and/or act as a change agent to help find solutions that will strengthen the business every day. For example, CFOs managing businesses with financial covenants or ones that hold a significant amount of debt will want to do more than just present results and point out variances. They’ll want to curtail unnecessary spending in the coming year to avoid putting the company at risk. For those businesses without debt, CFOs might recognize the opportunity to prioritize growth and take advantage of this time to use cash reserves to grow market share or make other strategic investments.  

3. Don’t forget the human element: Leverage what and who you know  

The strategic CFO leverages their networks and peers to navigate through macroeconomic challenges. CFOs who take advantage of this time to reset business priorities, whether it’s building or reorganizing technology infrastructures, upskilling talent and/or reaching out to others in the financial community to share thoughts and ideas for continuous learning, will be in a better and stronger position once the economy recovers.  

The strategic CFO knows there is always uncertainty about what lies ahead; no one has a crystal ball. But having the right technology tools in place is the first step to taming this uncertainty by providing finance teams with the insights and agility they need to automatically track and analyze cash inflows and outflows, and predict and plan for a range of future scenarios. This level of granular visibility enables finance leaders to make quicker, better, more informed decisions in the face of a complex market and the confidence to help lead the organization forward.  

Ryan Van Hatten is the Chief Financial Officer at Prophix