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What do CEOs want from the finance function?

Author: ICAEW Insights

Published: 29 Mar 2022

Chief executives want to see their Chief Financial Officers supporting their decision making, as business heads explain to ICAEW Insights.

“We want to see more strategic overview and guidance from finance, to bring it more into operational and commercial decisioning and less as an administration function, which it has been historically,” says Stefan Cars, CEO of travel company Snowfall. 

Gavin Lyons, Chief Executive Officer at Tax Systems, a tax software supplier to accountancy firms and corporates, agrees, saying that while the CFO was responsible for the financial foundations and risk associations, leveraging data and their leadership skills for decision-making was key.

“I’ve tended to operate with the CFO to get the right financial policies in place: good cash management, getting budget expense controls in place and overseeing compliance and risk management. This should enable the CFO to shift into how to deliver forward insight, to be an effective partner to the CEO, and how to use leadership experience to take on more accountability,” he says.

Snowfall CEO Cars points to continuing automation as a driving trend, allowing the data insights from the CFO to be in real-time to add flexibility to business decisions.

“It is increasingly important as the world is changing quickly, everything is getting faster and you can’t rely on a forecast that is a month or even a couple of weeks old,” he says. “You need real-time information. We can automate these with systems that help produce this forecast and be much more accurate.

“We have seen automation over the past few years, but we will see it a lot more, especially for more complex types of tasks, whether that is for FX or other risk management.”

Anton Roe, Chief Executive Officer at HR, payroll and finance company MHR International, agrees that CFOs should take more of an active role in the business, as businesses are missing out on longer-term planning due to short-term market volatility.

“Research by MHR shows that 46% of finance leaders are failing to undertake long-term scenario planning, which is leaving businesses lacking a five-to-10-year plan,” says Roe.

“Further findings show that 64% of those leading finance teams don’t have the resources in place to effectively implement planning and analytics.”

How CEOs can support change

All of the CEOs we spoke to say better communication and more integrated working styles across the functions would help their businesses prosper.

“It’s about creating more cross-functional teams,” says Cars. “Finance should take guidance from other teams to help our CFO out. Having that input would help a lot of problems get solved, whether that is using different tools, or empowering the whole department.”

Better investments in data collection and communication systems were key, as were more technical or business-specific system upgrades. This included investment in automation and the ability to move to real-time data, reducing manual areas and that reliance on Excel spreadsheets.

“The other thing is time – time to benchmark industry metrics and how you are performing against peers, to then put that in context against the business that you are running,” says Lyons.

All three business leaders say CEOs need to allow the CFO to be seen internally as a strategic partner, with visibility during company announcements and relative autonomy for action.

MHR International says its research shows that nearly half of all finance leaders typically never get the opportunity to advise on strategic decisions within the business.

“44% of CFOs are struggling to take on these strategic functions due to being preoccupied by time-consuming and manual tasks,” says Roe.

“Adding automation into the business is helping lighten their load and ultimately allowing them to take their seat at the top table, with revenue forecasting (40%), publishing accounts (39%) and audits (32%) all identified as key areas to automate and provide value.”

Why the need to change?

Cars says that as a travel company, the pandemic has been hugely disruptive, making forecasts unreliable, and the recovery has been equally erratic, making predictions extremely difficult.

“These changes mean you can’t look back to 2019 and pretend that this is how March that year went and hope that they will match,” he says. “Everyone has to get more involved and think outside the box and that requires a lot of cooperation. In an ever-changing world, we are much more vulnerable to supply chain issues and inflation, and once again proactivity and not relying on historical data reflect better on everyone.”

He points to his business’s investment in AI technology, including foreign exchange hedging software Bound and other AI products used to automate expenses, saving time to free up finance for more strategic work.

“Our people should be spending their time making decisions and adding value, not looking at receipts and approvals,” he says.

While all three businesses work across very different sectors, there is a consensus that working more closely with finance could help each to build shareholder value, drive growth, manage its costs and anticipate its risks.

“We are in a faster economy now and the CFO is well placed to help with the need to do things at pace and in a digital environment. There is more pressure to be able give that insight more quickly and with greater accuracy,” says Lyons. “The more you can have an integrated platform, the better. We will continue to invest in that for sure.”

Roe agrees, and says investment is crucial. “This will allow CFOs and wider finance teams to be more strategic in their roles by enabling greater data visibility to support long-term decision-making, while also ensuring data integrity and security."

Future of the finance function

Transformation within the finance function has been accelerated over the past couple of years. How is the role of the finance function changing? What technology is facilitating that change? And what skills are most in demand?

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