It may seem like the distant past now, but it was just a few short years ago when the economy had reached new lows. Thankfully, times have changed, and things are looking good for businesses in 2015. Because the economy is improving and the speed of the business world is faster than ever, it is important for business leaders and, in particular, for Chief Financial Officers (CFOs) to re-think their focus for the upcoming year.
If you think back a few years to the time of the economic crisis, CFOs had to become almost exclusively focused on finding ways to reduce costs and to ensure profitability as much as possible. Their focus was diverted from managing the financial state and challenges of the company. In today’s business world, this has changed. While CFOs can get back to focusing on this role of focusing on the financials, they have learned to be more cautious in case of another downturn. With so many hard decisions to make, CFOs must now look for innovative ways to improve and protect the company’s finances while expanding the company’s financial reach and maximizing on all of the financial software options that exist.
While there is much financial software available that can help with these processes, CFOs still face many challenges. Below is a list that CFOs spanning numerous industries have cited as their biggest challenges currently being faced that are expected to continue being a focus in 2015. Use these possible difficulties as a guide to know what to focus your time, energy, resources, and technology improvements on in the upcoming year. In particular, consider how these impact your budget and where to prioritize money to address them.
1. Cash management.
Many of today’s companies are showing significant signs of growth in terms of profitability. As companies continue to reach profit goals and regain much of the revenue lost in the recession, CFOs are challenged to find new ways to redistribute cash so owners and shareholders remain happy. This requires CFOs to adopt proactive cash management strategies in order to correctly analyze the amount needed for future growth, capital spending, debt repayment, and dividends.
In the United States, the Affordable Care Act presents a huge challenge to CFOs.
3. Leadership Succession.
As business owners ease out of their roles and execute their exit plan, CFOs are left with the extensive job of driving shareholder value. This often requires strategic change within the company, and it is the CFO’s job to thoroughly understand what drives the value of the company and industry. As the company falls under new ownership (whether it be from the next generation or an outside sale), the CFO is required to make the necessary changes to support the company financially during the transition.
4. Protecting Profitability.
CFOs all around the world are responsible for ensuring their company remains profitable and continues on a steady path of growth. In order to support business growth, CFOs are required to review the cost benefit of investing in new technology or equipment and create a manageable staffing plan that can adequately balance the revenue growth with the owner’s expectations of profits.
5. Financial Visibility.
The CFO is constantly challenged to “do more” and take on more responsibilities. In order to ensure that the financial functions of the company are operating efficiently and effectively, it is imperative for the CFO to offer financial insight into every aspect of the business and capitalize on that perspective. Building strong relationships with all departments (sales, IT, operations, etc.) within the organization will create more opportunities for visibility and influence.
If you are facing any of the above challenges, know that you are not alone. CFOs all around the world are struggling to figure out their role in their organization and how to best perform their job. There are many financial software solutions available to ease some of these challenges. If you are in need of more information or assistance to address your budgeting, accounting, and financial software needs, please contact us at Mindover Software.