The Role of the CFO: What You Might’ve Missed
- Banking, Insurance and Financial Services
On Thursday, JAGGAER’s SVP of Strategic Operations Kristian O’Meara sat down with our COO / CFO Vic Chynoweth and Discover Global Network‘s Head of Finance Bill Franklin to discuss how CFOs can be most effective in responding to the global COVID-19 crisis.
The conversation ranged from communicating priorities to maintaining cash and collaborating with the procurement function and provided insights for finance and procurement professionals alike. We’ve collected some of the highlights here, but the full 45-minute presentation is worth a watch to get all the wisdom from our presenters.
To get the full insights from Vic and Bill, watch the discussion now.
Building Priority Alignment Between CFO and Team
One of the biggest points of discussion was aligning with the larger financial and procurement teams around priorities. Vic Chynoweth was very quick to suggest that he’s a big fan of frameworks, so he’s established a communication framework at JAGGAER that includes scorecarding and reporting. Every company should have clear visibility and establish a framework for communications, he said.
Bill was quick to add that it’s important to make sure that priorities are communicated up and down. “You have to build priorities from the ground up, rather than just having it cascade down.” Vic agreed, saying “Bidirectional communication is the norm … More often than not it’s about someone on the frontline informing leadership.” Establishing these dialogs can be vital in making sure that there’s buy-in from all team members on the larger business goals.
Limiting the number of priorities is also key, said Bill. “In the past, we’ve had 20 or 25 different priorities.” Instead of long lists, it’s important to make sure the initiatives are clear, actionable, and realistic. “If you have two or three goals on a paper, you’re going to get them done. If you have 20 on a page, you’re not going to get them done, ”he said simply. Vic agreed with that, saying, “People really think in threes. ” By keeping the list short and executable, you’ll see better results from your team members. The final key, he said, is providing a clear connection between individual tasks and company goals, so that each team member knows precisely what they’re working toward on a higher level. “That’s hugely valuable in driving engagement,” said Chynoweth.
Priority Number One: Maintaining Cash
In terms of the actual priorities CFOs are setting in the current climate, the top item was clear: preserving cash. Chynoweth, Franklin, and O’Meara all agreed that organizations around the world are highly focused on maintaining liquidity. As Franklin said, “ Right now, the pandemic is resulting in a lot of business goals changing. There’s a lot of reprioritization that’s going on across the business.” He did emphasize the unique position that Discover Global Network is in, because they’re not just a payments provider but also a bank, which makes liquidity all the more important. “We’re constantly stress testing liquidity,” he said.
Chynoweth was quick to point out that most advanced finance departments do at least some stress testing, but that the current situation is so unusual that it likely was not tested for. “Most companies probably didn’t do a pandemic scenario, relative to liquidity.” For companies in some industries, like retail, they’ve seen a massive shift in their cash levels. Ultimately though, cash on hand is one of the most important elements of the job. ” Liquidity is core and central to any CFO’s responsibilities … We, along with every company, have to be prudent about liquidity.”
Managing liquidity, as Vic explains, is all about balancing inflow and outflow obligations. In a crisis, inflows slow down but outflows usually don’t. It’s vital to make sure your organization has enough cash on hand to make up the difference. “We absolutely have to be liquid as a company. That includes lines of credit, access to equity capital, reducing expenses – anything we can do to slow down outflows and increase inflows, ”Chynoweth explained.
Procurement teams can have a large part to play in making sure outflows are decreased. In addition to minimizing unnecessary spend, it can be a perfect time to look at whether existing vendors and contracts are proving worthwhile. Providing an example from JAGGAER, Vic noted that the company is auditing software licenses and subscriptions that have built up over time to make sure they’re being put to good use, and the procurement function is central to that effort. Bill doubled down on that point, suggesting companies look at current contracts and look to optimize them, rather than just renewing them as-is.
Being Agile and Responsive
The key to navigating an unexpected crisis is to have some agility and be able to respond quickly to changing demands. For Vic, this means building a foundation on which business partners are self-enabled so that they have fewer requirements for the core finance team. “The more that we can deliver in an automated, normalized process, then the more time we can spend doing things that generate value,” he explained. When reports, paperwork, and simple tasks are automated or provided self-serve, the finance team has more time to create value rather than handling menial tasks. It’s key during business as usual times to build this foundation and automate as much as possible.
Bill recommends examining the finance team for bottlenecks. Where is the team getting slowed down, and how can you make sure you don’t hit those disruptions? The key question to ask might be, “Is there business as usual work that you can take out just to give the team more capacity?” By temporarily reducing the day-to-day activities, like less important reporting, you can provide more flexibility to handle urgent needs during the crisis.
A final tip from Franklin is to simply say no to some requests. There will be many decisions posed to the team that you don’t need to make right away. Instead, let the environment dictate those decisions so that finance and procurement can focus on other things in the meantime.