The CFO agenda: unlocking growth without compromise

The role of the chief financial officer (CFO) is at a pivotal point. Technological advances, economic uncertainty and competitive pressures all pose significant opportunities and challenges for businesses, and the need to bridge the gap between the finance function and wider business goals has never been greater. 

Against this backdrop, the role of the CFO has evolved from financial gatekeeper to strategic player, with fellow C-suites and stakeholders increasingly relying on CFOs to leverage their insight, expertise and financial data to steer the organisation. This, however, requires CFOs to embrace new ways of thinking, develop a deeper understanding of the business and adopt new technology.  

To gain insights into how CFOs are adapting to the changing landscape, Raconteur and Payhawk surveyed over 200 decision-makers across a variety of industries. The research uncovered the importance of a holistic view for sustainable growth, the strategies CFOs are employing to navigate tough economic conditions, and the vital role finance technology and spend management data will play in helping businesses grow. 

Traditionally, CFOs have had a lot to juggle, with key focuses on accounting, tax, and safeguarding assets during volatility. These focuses continue to be a high priority for CFOs, but now, finance leaders are also adapting their financial strategies to respond to external economic pressures such as inflation and interest rates.

More than half (54%) of respondents said they are focusing on streamlining costs to cope with these challenges, while 48% said they were tackling a tough economic climate by improving cash flow forecasting - an essential activity when trying to better understand the potential financial runway a business might have in periods of uncertainty.

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A stark finding to emerge from the research is that more than half of respondents (58%) say they have had to make or consider making customer experience compromises to survive in the current climate. This data surfaces a trend that could potentially see businesses take actions that negatively impact consumer satisfaction and loyalty, as well as damage their ability to stay competitive.

There was also a division in the most common cost-efficiency measures taken by respondents, with chief technology officers (CTOs), chief operation officers (COOs) and chief information officers (CIOs) most likely to cite outsourcing non-core functions to lower costs, while CFOs prefer to conduct cost-benefit analysis to accurately pinpoint cost-efficiency opportunities

But beyond their core financial responsibilities, the results of the survey also shone a spotlight on the transition of the CFO to a value-adding business partner. The events of the past few years have undoubtedly heightened the need for CFOs to reevaluate their priorities and expectations to encompass a wide range of trends and considerations. As such, more than half of respondents now cite scenario planning (and access to accurate data to support planning) as their highest priority strategic response to navigate economic difficulty.

The unprecedented rate of change and new and emerging risks also require businesses to move faster – and agility will be critical. Unsurprisingly, 62% of respondents said building a more agile or strategic team is a leading priority for CFOs over the next 18 months.

As a result, CFOs are increasingly coming to be viewed as highly strategic leaders, with this recognition most widely acknowledged amongst CFOs and COOs. However, one in five CIOs believe CFOs remain undervalued in their business, suggesting that despite their growing responsibility, the depth of their involvement continues to be overlooked in some quarters. 

A key trend that emerged was the pressing need for finance departments to gain a more holistic view of their organisation to support growth. However, the vast majority of respondents admitted that it is ‘extremely challenging’ to get complete, centralised control and visibility of the project/department spend and expenses across global or multi-entity businesses. This highlights the need for greater cross-team communication and collaboration. 

Similarly, managing risk effectively, ensuring alignment between finance and operational goals and balancing short-term and long-term goals are all additional challenges facing finance departments. 

The past few years have seen an explosion of new technologies to market. For the C-suite, it is becoming increasingly difficult to ignore the benefits offered by finance tech, from cost savings to enhanced operational efficiency and strategic insights. The research revealed a positive correlation between the use of IT and unlocking new opportunities, with 98% of respondents stating that finance tech helps them make decisions. 

Investing in digital transformation and harnessing real-time insights across the business to steer the company’s strategy has emerged as a key priority for CFOs over the longer term.  

Yet, the path to digital stewardship is not without its challenges. There exists a number of gaps between financial technology and decision-making. These include the ability to support long-term financial planning and strategy, managing financial risk and complying with regulation. In fact, 93% of respondents said harnessing centralised data analytics for informed financial planning and forecasting was a significant challenge. 

These challenges mean CFOs must approach technology with a strategic mindset, creating a cross-business culture of digital learning and development and prioritising tools that really enhance the business’s operations and offer the most value. 

Over the next 18 months, CFOs will walk a tightrope between seizing new opportunities and implementing robust strategies that ensure the business is well protected against economic volatility. Legacy systems, a lack of cross-team collaboration and visibility all pose obstacles for finance departments, highlighting the need for CFOs to remain adaptable, proactive and resilient. For those who not only recognise but fully embrace transformation, there is a brilliant opportunity to stand out and create value for their organisation.

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As the landscape grows ever more uncertain, fuelled by economic volatility, geo-political tensions and changing market dynamics, CFOs are having to approach their role differently. 

No longer the chief number-cruncher, the modern CFO has emerged as a key leadership figure, working alongside CEOs to define and execute the business’s strategic goals. But this shift means CFOs must develop a holistic understanding of the business and a solid grasp of its future outlook. 

For CFOs, getting access to accurate data to support understanding, planning, and accurate forecasting is massively important. According to Raconteur and Payhawk’s research, the leading priority for CFOs today is improving forecasting (78%), followed by improving metrics and insights.

George Kutnerian, CEO of Wellpointe Inc., a provider of residential assisted living services, says: “Scenario planning is key as a growth company. You want to know what things will look like when they don’t go to plan. You want to understand where your sensitivities lie. What are the real drivers in your model?” 

But the shift from reactive to proactive is not without its challenges. Building visibility of the business can be difficult, particularly as companies expand to different regions or countries, create new products and grow their workforce. 

The research revealed that 63% of CFOs and 70% of CIOs deemed centralising control and visibility as “extremely challenging.” Furthermore, 96% of respondents said gaining visibility of the rest of the business to understand how other departments operate was a ‘very significant’ challenge. 

Risk management is a key priority for CFOs, particularly in volatile economic conditions, as is optimising capital allocation to support strategic initiatives. But it becomes much harder for CFOs to understand financial risks, much less predict them, working in silo rather than collaboratively. For CFOs, the transition to gaining greater visibility will require continuous learning, strong communication skills, broader operational skills and a deep understanding of the importance of technology and data. 

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Gerard Keenan, CFO at pharmacy app Charac, said: “Most CFOs don’t invest time to understand the business dynamics and customer mix. It is extremely important that CFOs understand the operations so that they can use financial tools to help mitigate risks, particularly cash flow.”

CFOs will need to work closely with fellow C-suite executives and other departments outside of the finance team such as sales and marketing, to understand the needs of the business as well as the differing challenges and opportunities. Effective collaboration leads to greater alignment on spending, budgets, pace of change and technology needs – all essential ingredients for long-term success. 

Tom Carless, CFO at investor relations business Edison Group, says: “CFOs should have regular dialogue with different stakeholder groups that allows them to verify the information they are receiving. This group should include other business leaders in their company, staff at the coal face, clients, suppliers and competitors.” 

The pace of technological advancements shows no signs of slowing, with the likes of AI, machine learning and data analysis disrupting businesses across all industries. In this new age, digital transformation will be at the heart of increasing CFO visibility and influence.

As the saying goes ‘data is the new oil’ and having access to company-wide data offers valuable insights and a deeper understanding of the bigger picture behind the numbers. 

But for many CFOs, it can be difficult to gain the insights needed to make better-informed decisions without the right data. After all, the output is only as good as the input and a lack of data integrity risks blinding CFOs rather than empowering them. In fact, 85% of respondents cited visibility as the biggest challenge facing CFOs when managing multiple tools, followed by transparency, and data quality and consistency (73%). This is a huge red flag for businesses that need to be able to capitalise quickly on opportunities both today and in the future.  

Tim Wright, head of operations at finance software provider Xledger UK, points out that legacy systems can pose obstacles.

“We are seeing a lack of what we believe to be necessary requirements like access to real-time data and the ability to accurately forecast. But the modern finance function seems to be at odds with itself. Aware of the misgivings of outdated systems but concerned about how to sustain business as usual and an increase in backlogs,” he says. “Finding the right time to take the leap and commit to change seems to be a common concern across the profession.”

According to Wright, for finance departments to realise the true operational efficiencies that will provide a holistic view of an organisation’s finances and enable them to predict future trends, teams must first build trust in the transformation process.

“Building that trust starts with empowering new forecasting and business planning capabilities across the finance function. It is here that CFOs deepen their confidence in the digital transformation journey and champion finance to become a true strategic enabler for future business growth,” he explains.

For Carless, accurate and timely management information systems and dashboards that incorporate both financial and non-financial information will be key to broadening the CFO influence and helping them position the business for the future. 

He explains: “The CFO must ensure that there is a common understanding and interpretation of this information within the business and in a fast-paced environment, the information should be real time.”

It is also important that different departments are empowered to adopt new technologies that are fully integrated and perfectly aligned across the business. 

Kutnerian says: “If you’re going to hold teams accountable or reset expectations from a cultural standpoint, make sure you give them the right tools to deliver on the changes that have been asked."

In today’s world, change is a given. To lead successful businesses and prepare for tomorrow, CFOs will ultimately need to position themselves at the forefront of innovation built on investment in people, processes and technology.

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Ben Edwards

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With economic strains globally continuing to impact operating conditions, CFOs are under increased pressure to reduce costs and improve efficiency to maintain profitability. For some companies, this has meant accepting trade-offs which potentially compromise the customer experience, either by raising prices or reducing product quality. According to Raconteur and Payhawk’s research, 58% of corporate leaders said they had to make or are considering making compromises to survive in the current economic climate. Larger businesses were also more likely to have made compromises, the data showed.

“The main issue companies face is the route to profitability,” says Konstantin Dzhengozov, co-founder and CFO at Payhawk. “Interest rates are high and forecast to stay high, at least for the foreseeable future. There is a lot of uncertainty in global markets – are we going to go into recession or is the worst over? So to maintain top-line growth in this environment, companies are often forced to make compromises.” 

Half of respondents say they are navigating this tougher economic climate by increasing customer costs, while 48% said they have reduced their number of products. However, compromising on quality is off-limits for some companies.

“No matter the challenges, quality to the customer is paramount,” says Vijay Padmanabhan, CFO at digital transformation consultancy UST. “When it comes to price increases, we will have a conversation with the customer about the realities of the market and as much as possible work with them. Sometimes we’ll have to pass the cost on, but other times we might be able to find innovative ways to manage costs.”

This latter approach taps into a concept coined by authors Jim Collins and Jerry Porras called ‘the genius of the AND’ – the idea that good leaders are capable of achieving seemingly opposing goals at the same time. Instead of thinking in terms of cutting costs or maintaining the customer experience, CFOs should be committed to cutting costs and maintaining the customer experience. 

There are several ways finance leaders can achieve this, for starters by cutting back on unused or overpriced subscriptions.

“We are continually assessing each quarter all the different tools that we’re using before we renew a software subscription,” says Dzhengozov. “We carry out a very deep dive internally and ask, are we using this? Do we need it? Is there an alternative supplier that can provide the same thing at a cheaper cost? So we’re really obsessed with subscription spend because it’s a very big expense for us and for a lot of companies nowadays.”

Advances in technology, such as the advent of generative AI, are also helping companies find ways to cut costs without compromising on the customer experience.

“We are investing in GenAI to improve the productivity of our software engineers and we’re also looking at automation to improve efficiency, so it’s about using new tech to reduce costs,” says Padmanabhan.

Stricter financial controls can also help CFOs navigate the current economic climate, especially by adjusting spending in ways that are more tailored to customer needs.

“If you want to guarantee long-term financial stability without compromising on the customer experience, I suggest implementing rigorous cost control measures by leveraging data analytics for insights into customer preferences,” says Vineta Bajaj, CFO at online grocery delivery business Rohlik Group. “This will enable you to optimise your operational procedures in ways that will benefit your customers.”

CFOs should also closely scrutinise existing working practices to see if redesigning workflows could yield potential cost savings.

“Streamlining your operations to eliminate redundancies enables you to cut down on expenses without skimping on the service quality your customers have grown accustomed to,” says Bajaj.

Getting a grip on unnecessary costs will also require CFOs to be able to view corporate spend across the business in real time, helping them more accurately pinpoint wastage and quickly address those expenditures. This can help avoid costs stacking up if such monitoring is only performed periodically.

“Visibility and real-time data is the one thing that is critical – if you don't have visibility on what’s happening with the business and why you are spending X amount of money on a particular expense in a timely manner, then it’s difficult to manage costs effectively,” says Dzhengozov.

In this climate, therefore, CFOs need to adopt a financial strategy that is laser-focused on using resources more efficiently and eliminating unnecessary expenses wherever possible.

“You have to look at your priorities and where you are investing very carefully,” says Padmanabhan. “You have to focus on growth, without growth companies can't survive. So you need to identify the key growth areas and cut out areas where you don’t see growth or where the future is not so bright.”

Given the scale of economic uncertainty, a good financial strategy in the current environment also needs to be agile and adaptable so organisations can better react to market shifts.

“You need to plan for at least two or three scenarios and you need to readjust constantly based on current market conditions and every signal that you get from your customers, because you might be way too optimistic or way too pessimistic,” says Dzhengozov. “The best plan is to execute on your vision, but keep updating it and keep everything very flexible so that you don’t end up with a very unpleasant surprise.”

By taking these steps, organisations have a better chance of more effectively managing their costs without compromising on customer experience.

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