3 Questions CFOs can expect from their CEOs during challenging times

3 Questions CFOs can expect from their CEOs during challenging times

By Digital CFO Asia

Date: 22 June 2020

Chief Financial Officers (CFOs) are second to CEOs in terms of rank and seniority in most corporate organizations. Traditionally, CFOs have been seen as a C-level accountant role in the past. With the digitalization of business and finance, CFOs have evolved to be more of a business partner and are expected to support the CEOs in various aspects of managing an organization, such as leading an organization through a pandemic.

As a business partner, CFOs have to anticipate what kind of questions CEOs will have for them, which will differ according to how broad the CFOs’ job functions are. The importance of how CFOs answer such questions is very much magnified in current challenging times, as it might affect the survival or long-term interests of the organization. CFOs have to raise objections against their CEOs if any plans or proposed actions are not in the organization’s long term interest.

To ensure a mutually beneficial relationship with CEOs, CFOs should plan how to answer the following three questions during challenging times:

1. What are the areas in the organization where we can best reduce costs & overheads?

Sales are taking a big hit during such times. Revenue is dwindling and cash flow is increasingly fraught with tension and difficulty. The immediate solution is to cut back on costs. CFOs must have this information at the back of their palms because this will be the first question they will face. Will you consider layoffs and retrenchment, or will you put employees on no-pay leave? Will you consider drastic steps to raise capital or recover bad debts? Or reduce employees’ claims and expenses? CFOs need to know what to do next.

2. Do you have any business continuity plans in your department if you are in a situation when you are unable to carry out your duties as CFO?

Given the current situation, this question is very real. What if the CFO or any member of the finance team caught COVID-19? Are there any contingency plans? Is there a ready short-term succession planning? A lot of organizations have initiated a full work-from-home policy (WFH) until further notice. Some firms have placed BPO (Business Process Outsourcing) firms as a backup in the worst-case scenario when the whole finance department is down.

3. Given the unprecedented situation here, are you able to adjust your previous cash-flow budgeting & forecasting to fit the current scenario?

FP&A (Financial Planning & Analysis) is a key component for the finance department. Often, budgeting & forecasting are done way in advance before the current year, but COVID-19 has thrown a spanner in the works. Everything has changed or will change. Hence, how agile is your FP&A process? Is it automated? Do you have software that can give you an accurate prediction by changing the inputs or must you re-do the whole process? What is the most functional FP&A technology you should know and consider?

Having well-prepared answers for these three key questions will stand the CFO in good stead and help steer the organization safely through murky waters. No one knows how long this pandemic will last so CFOs should start preparing for the long-term scenario that all organizations will be operating in a world in which COVID-19 is active and present, and accept this as the new norm until a vaccine is found and widely available.

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