I'm often asked, “as a CFO, how can I maximize impact in the recessionary environment this year.” This blog post contains my answers.
The year has well begun and everyone is already working on their objectives. But are they what you should be focussing on? Based on my experience and conversations to leaders in the financial industry, I believe these are the ten things you should prioritize in 2023.
We have been talking about financial transformation since 2010. Now, it is no longer about starting it, but driving maximum value from these initiatives. So, evaluate transformation projects with a critical eye:
If the answer to any of the above is no, kill the initiative and move on to something that delivers value.
The world has changed since the pandemic — teams work remotely, use various tools for collaboration, etc. As money gets harder to come by, the C-suite is looking to the finance function for greater business insight.
Restructure the finance function with goals around delivering business value. Focus on what helps bring more cash in and less cash out. Be the point-guard and enable the organization grow.
The pandemic hasn’t just changed the nature of work, but also global prices, supply chain operations and so on. To navigate this world, you need a better budget.
Finance is the first to see cost-prime or growth-prime. If you have done your planning, budgeting and forecasting right, you are likely to know upcoming challenges. So, escalate those quickly enough, so you can protect your organization from adverse impact.
When getting into new contracts or renewing existing contracts, look for clauses that cover price changes. Protect yourself from price increases in the future.
Ensure that your best performers are ready and geared for success, despite the economic uncertainty. Lead by example. Behaviour modelling helps teams invest themselves in the right projects.
Remember, in 2023, you don’t manage just people, but robots as well. Learn to manage and work with robots. Create an organization where people and robots work seamlessly together. As an example, I’ve shown in this ebook how you can master ChatGPT to analyze figures, create Excel formulas, write SOPs and emails and financial analysis with step-by-step instructions, real-world finance use cases!
I often use this model from Harvard Business Review to design cost-cutting initiatives.
You can read more about it on my blog, but let me tell you a story now. A few years ago, I was nominated head of finance for a manufacturing site employing 400 people, generating 100 million euros of revenue. We were in a crisis because there was immense competition and prices were increasing every year. My boss told me, “we need to reduce prices to keep market share or die.” The following helped us survive:
Benchmarking: I benchmarked our site in comparison with other sites in headcount, finance, sales etc. This helped identify opportunities for optimization.
Restructuring: We looked at the highest expense initiatives and optimized them. We reviewed maintenance contracts and support costs. We spoke openly with our vendors and renegotiated prices.
Information-transparency: We explained the situation transparently to the entire team and invited them onboard the cost-cutting measures. We created a dashboard and updated live so the teams are motivated to compete.
Drum-beat meetings: Leaders came together regularly to review progress and exchange ideas. This helped everyone stay involved.
Cost-cutting doesn’t mean no-spending. It is important to invest in technology, especially now. Automation of processes like order-to-cash and procure-to-pay can be done with minimal effort and maximum cost-savings today.
However, remember, tools are not going to solve problems if you don’t standardize processes, communicate effectively or have clarity on goals and roadmap. For instance, if you have 100 ways to raise an invoice, standardize first to 2-3 ways and automate that. Don’t do it the other way around.
Set up accurate and clear cashflow planning.
Bring your team together and show the team these numbers. Rally the team towards becoming cash positive.
Environmental, social, and corporate governance is gaining momentum, especially since the pandemic. Finance plays a critical role in achieving ESG goals — redirecting investments, evaluating projects, maximizing ROI etc. Be the torchbearer of the financial impact of ESG initiatives.
Transform financial planning and analysis for the new world. For instance, software procurement has changed dramatically. SaaS is an entirely new model with complex pricing. Moreover, when you receive new prices from vendors, you can feel hand-cuffed. If you don’t have expert SaaS buyers in your procurement team, employ help.
To get into the details of each of these priorities, watch my conversation with Siddharth Sridharan and Edward Kim.
Our free savings analysis tells you how much you’re guaranteed to save with Spendflo. Learn more about cleaning up and automating your tech stack from our experts.