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New CFO Mandate

The New CFO Mandate: Reshaping a new finance function for the post-pandemic new normal

The pandemic-driven upheavals have caused several broader disruptions in the business world with human-stress and economic-turmoil having the largest impact on the CFO fraternity. In the fall-out, CFO have lost jobs, taken early retirement or started looking for alternate opportunities.

The business world is now evolving a new mandate for CFO with the background of persistent worries about the pandemic, economic recovery & anxiety about the durability of the economic boom, new normal and need to manage the transition to a world reshaped by trends like hybrid work and digital transformation. According to the latest McKinsey Global Survey on the role of the CFO,1 finance leaders are deeply involved in determining how businesses adapt to these trends—particularly in those places where digital and finance intersect.

The new mandate will include the following main thrust which a CFO/ Virtual CFO may have to address to help the business grow:

1. The core tasks of CFOs/ Virtual CFOs:

Overseeing organizational finances, optimizing risk management, and managing regulatory compliance shall continue to play its role.

If you are a Small Business, choosing virtual CFO services can be advantageous as they are less expensive than the hiring of an in-house CFO. And most importantly, a virtual cfo is qualitatively better at their job than your average in-house cfo.

core tasks of cfo

2. Strategic Collaborator:

what does strategic cfo do

During the height of the pandemic, CFOs became more visible and now own a proactive role in building team confidence through transparency and open information sharing. These traits enhance employee loyalty and understanding of the business, ultimately supporting company performance through lower turnover rates, greater levels of engagement and higher customer satisfaction.

3. Tech Champion:

The CFO function shall now be an integrated to other functions like people management, data analytics, digital transformation and greater technology adoption as Tech Champion with greater technology adoption as per the graph below

tech champion

4. Digital Adoption:

CFO’s believe they need high quality data to prepare for the future. Most companies are now investing in technologies to ramp up their data analytics and integrate data-driven technologies like artificial intelligence to streamline operations and unlock new efficiencies. In recent few years CFO’s responsibilities have grown in a few important areas—particularly in digital. Between 2016 and 2021, the share of finance leaders who say that they are responsible for their companies’ digital activities has more than tripled. Investor relations has also grown dramatically as an area of focus for CFOs. Nearly two-thirds of finance leaders say that they are responsible for these activities while the percentage was 44 in 2016. Broad categorization reflected as per Mckinsey recent survey as below:

digital adoption

5. Artificial Intelligence (AI) & RPA:

AI is new field and is also impacting the Financial Accounting process in general. Accountants are taking advantage of businesses using AI and Robotic Process Automation (RPA) to large data, automate repetitive and mundane tasks and focus on high value activities.

RPA shines when running discrete, simple, high-volume tasks that would usually require little human supervision like invoice processing, entering sales orders, processing refunds, and automating customer service responses. Further, during the financial close, balances need to be validated, Inter-company reconciliation completed, records must be consolidated, journal entries need to be adjusted, financial data is gathered to be disclosed, and then the adjusted financial statements must be prepared. There’s a lot of risk for error in these activities, and that’s where the hidden value of RPA will come in.

ai rpa 1

AI can be applied to complex areas like Lease Accounting & Fixed Asset where all relevant information can be gotten quickly through AI rather than look from the underlying records and Accountant can focus on decision making.

6. Data Security:

data security

Data breaches continue to be a bigger risk than ever and finance departments continue to be the leading targets. The breaches can be of identity theft, stealing of personal data or credit card information. In addition, spoofing (email disguised to appear to come from a known and trustworthy source) is also a common security threat. Training in these areas is crucial for accounting teams and help management is strengthening the cybersecurity for the organization.

In addition to the above, there are other growing trends in Regulatory Compliance, Accounting Standards, Changes in Tax policy on one hand and Gender equality, Talent diversity and upskilling, Hybrid working and Job movement are also gaining trends for new normal.

The above trends will continue to gather more momentum and the year 2022 onwards will continue to allow Accountants to showcase their talent to adapt, resilience and indispensable role in the business.

7. Policies:

Keeping track on the regulatory and compliance fronts on a regular basis as taxation and financial reporting policies are constantly undergoing change.

Having a virtual CFO on your side is definitely advantageous since you can use his or her expertise to keep your finances organized, which will make it easier to stay updated on any new financial regulations and compliances that could affect the company’s standing in the market.

policies

8. Financial Accounting & Planning:

financial planning

As markets are unpredictable, the CFO team should dwell more into the financial planning and analysis and build resilience by closely monitoring events and drawing up risk management models, bolstering liquidity of funds while also setting aside reserves if possible, diversifying assets to minimize risk, and taking advantage of government support programs where applicable.

9. Intersection with People Function:

As markets are unpredictable, the CFO team should dwell more into the financial planning and analysis and build resilience by closely monitoring events and drawing up risk management models, bolstering liquidity of funds while also setting aside reserves if possible, diversifying assets to minimize risk, and taking advantage of government support programs where applicable.

cfo intersaction with people

10. Paperless Accounting:

paperless finance

The advent of technology has revolutionized businesses and has done away with paperwork in offices. A lot of space has been saved as files are now stored in electronic gadgets and virtual storage. Paperless accounting involves transaction processing that is entirely electronic, with almost no paper involved in any business process. The intent is to streamline processes, reduce transaction error rates, and eliminate document storage.

11. Key Performance Indicators (KPI):

CFOs should also seek out solutions that help them better track their KPIs in real time and drill down deeply into the data when necessary to better understand challenges or identify promising new opportunities. In addition, enhanced data capabilities can also improve risk modeling and help recalibrate their investment portfolios to better align with organizational needs.

kpi

Conclusion

The road ahead won’t always be smooth. The new mandate, with anticipated digital transformation, rapid change and ongoing uncertainty, is a task cut-out for a new genre of talent pool that can develop a focused approach and a willingness to break out of the traditional CFO paradigm to achieve a more profitable, productive, and performance-driven destination.

About SBS

SBS Global is an ISO 9001:2015 & ISO 27001:2013 certified company serving since 2007. SBS Global offers a comprehensive range of Accounting, Virtual CFO Services, Compliance Services (i.e., Company Secretary services) & HR Services catering to the needs of Small & Medium Organizations across industry sectors to meet their changing needs & expectations. Our team includes employees having industry & domain expertise who have insights drawn from years of professional experience.

You can reach us via email enquiry@sbs-global.com or via call us @ +91 8884733955 / +91 8040301700.

For more information visit: www.sbs-global.com

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