The Next Normal for Financial Leaders
More CFOs resigned from their companies in 2020 than any other previous year, according to the Wall Street Journal.
“2020 was a brutal year for CFOs, in terms of the mental toll it took,” said researcher Shawn Woessner in the Journal article. While the pressures brought on by COVID-19 caused the spike in resignations, the next 12 months are looking brighter for financial leaders.
Whether you are a CFO for a large company or an SMB owner managing your own financials, we are exploring the next normal and sharing a few insights to help you succeed in a post COVID-economy.
The Next Normal
The top priority for CFOs and other financial leaders over the past year has been optimizing cash reserves, according to change management researchers at McKinsey & Co. As tensions ease and cash management turmoil settles, finance leaders should set their sights on growth and improving agility to bolster the company against future crises.
“Once concerns about cash preservation have been addressed, the CFO needs to ensure that the company is positioned to operate effectively in this next normal”
“Once concerns about cash preservation have been addressed, the CFO needs to ensure that the company is positioned to operate effectively in this next normal,” said McKinsey. They recommend making operational improvements to bolster productivity, as well as rethinking receivables management, reevaluating the investment portfolio and expanding the finance function's strategic influence. Let's look at these four initiatives McKinsey recommends in detail.
4 Ways Financial Leaders Can Drive Success Post-COVID
1. Boost Productivity Through Digitization
About 18% of CFOs said they believed application development was a key skillset to improve post pandemic, according to CFO.com.
While many businesses have clamored to enable working from home, these digitization initiatives in the finance, planning and accounting departments should be seen as an ongoing effort rather than a one-time investment. Technology solutions that once seemed out of reach are not only more available than ever, they have become business critical tools. McKinsey says that CFOs and other financial decision makers should take a leadership role in digitization across the organization. Find out about 5 keys to growing a business.
2. Focus On Customers When it Comes to Receivables
11% of financial leaders are focusing on customer service to drive success moving forward.
Many businesses have seen their customers struggle to make payments since the beginning of 2020. In order to encourage payments and loyalty, CFO's can spearhead development of new products and services to assist those customers who are struggling financially. Whether this means payment plan options, early pay discounts or customer portals where customers can easily manage their accounts, this will help boost customer loyalty and shore up revenue. Learn more about how to get clients to pay faster.
3. Reevaluate Investments and Strengthen the Balance Sheet
About 22% of financial leaders believe business strategy is a key skillset for success moving forward, said CFO.
CFOs can be key influencers in a review and optimization of investment portfolios. Cleaning up your balance sheet can improve financial flexibility. Finance leaders can also drive reallocation of human and financial resources to revenue generating initiatives that will have the greatest impact on the company's future.
“Review goodwill impairments, refinance debt, reduce inventory, review accounts payable and accounts receivable terms”
Now is the time for a “deep diagnostic” on the balance sheet. Where do you start? Review goodwill impairments, refinance debt, reduce inventory, review accounts payable and accounts receivable terms, etc, according to McKinsey.
4. Turbocharge the Role of Financial Planning and Analysis
Data analytics is seen as key to post-pandemic success by 23% of financial leaders, according to CFO.
As data tools become more accessible, financial planning and analysis is no longer just for large enterprises. SMBs are now equipped to make decisions based on data insights coming from their financial departments. Financial teams that want to increase their influence in larger organizations can start by delivering real-time dashboards with key performance indicators to decision makers. With the right accounting software in place, tracking KPIs has been simplified for businesses of all sizes. What Are the Top Payables KPIs
“No one knows exactly what the next normal will look like, but more flexibility, more mobility and more strategic influence will be key for financial leaders”
Hopefully these tips are helpful as you position your company to win this year. No one knows exactly what the next normal will look like, but more flexibility, more mobility and more strategic influence will be key for financial leaders. Digitalization is the easiest and most cost effective way to achieve these.
If you are a financial decision maker for your business using an aging ERP system you may be able to turbocharge your finances with customization and add-on products for additional capabilities. You don't have to invest in a whole new accounting system to modernize your current system. Because many of these integrated add-on technologies are delivered through the cloud through subscription licensing, the cost of entry into these new solutions is more affordable than ever.