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FP&A, Analytics are CFOs Key Targets for improvement

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CFO Signals survey suggests that beyond the pandemic, finance leaders anticipate multiple bumps ahead

Tricia Ang | 3 May 2021

Photo by Adeolu Eletu on Unsplash

CFOs may be optimistic about the post-pandemic economy, but they are not expecting business to resume as normal. According to Deloitte’s North American CFO Signals survey, for the first quarter of 2021 most CFOs (58%) expect their finance employees to work only two to three days a week on-site, while nearly one-third (31%) expect more than four days a week on-site. In general, slightly more than three-quarters of CFOs anticipate that more of their work would be completed remotely post-pandemic, compared to pre-pandemic.

The survey received responses from 128 CFOs representing some of North America’s largest and most prominent corporations from February 8 to February 19. More than a fifth of the CFOs came from businesses with annual revenues above $10 billion. Public corporations account for slightly more than two-thirds of the total  (69%). Many CFOs foresee a hybrid on-site/remote work structure in the finance function, according to responses to a series of questions about financial leadership beyond the pandemic; about a quarter of respondents (24%) expect to hire fewer finance staff.

Among core finance functions, 63% of CFOs cited FP&A as the one they would most like to improve. CFOs may have developed a better view of how they’d like to redesign FP&A as a result of the increased pressure on FP&A teams during the pandemic—from offering robust scenario modeling to tracking and optimizing key priorities like cash flow and liquidity.

Improving core functions

Almost half of CFOs stated they would like to improve management reporting, with controllership/accounting identified as the top priority for improvement  (25%). Treasury (19%), investor relations (17%), and internal audit (15%) are the other roles that have been identified for improvement.

Given their emphasis on improving FP&A, it’s somewhat unsurprising that CFOs who responded to the survey claim they would disproportionately prefer data analytics and forecasting if they could bolster their finance team with a specific skill set or knowledge.

One respondent wrote in a comment of wanting “the ability to conceptualize and execute meaningful new analyses.” Deriving such insights from data often necessitates the use of technology, which may shine light on why technology, multimedia, and automation were ranked second  in terms of the skillsets or capabilities that CFOs would most like to add to their finance teams.

CFOs also seek greater business acumen and knowledge, presumably so their finance organization can increase its value to the business. And many CFOs would like to bolster their teams’ strategic and communication abilities, perhaps to identify new opportunities for growth, present more compelling narratives to investors or strengthen the finance function’s decision-making capabilities.

Few CFOs plan to rely on service providers to fill in the gaps. Just 21% expect more outsourced finance services in the aftermath of the pandemic; 55% disagree or strongly disagree that they will use more outsourced finance services.

Current Events

CFOs face challenges in the present while planning for the future. Just 37% of CFOs say their companies have already reached pre-crisis operating capacities, while 26% expect to make a full recovery by 2022.

The 10% of surveyed CFOs who say they do not expect a return to pre-operating levels sooner than the third quarter of 2022 are led by those from the retail/wholesale and healthcare/pharma sectors. “On an encouraging note, more than one-third of CFOs indicated their companies are operating at or above pre-crisis levels,” says Steve Gallucci, national managing partner, U.S. Chief Financial Officer Program, Deloitte LLP. “Still, a large percentage project it will take longer, some as far out as the third quarter of 2022 or later. And while COVID-19 cases are falling and progress is being made on vaccine deployment, CFOs remain highly concerned about the well-being of their talent and potential burnout.”

Factors contributing to CFOs’ overall cautiousness may include the discovery of COVID-19 variants and lingering social and economic fallout from the pandemic.

In terms of their own staff, fewer than one-fifth (18%) of CFOs expect to require all employees or employees in some functional areas/roles to obtain a COVID-19 vaccination before returning to on-site work (except for those with a medical, religious, or other reason); 41% do not expect to require a vaccine at all. 35% claim they don’t know and are most likely still trying to work out a policy.

As compared to pre-pandemic levels, expectations for post-pandemic travel expenses are dwindling. Overall, 86% of CFOs anticipate post-pandemic travel expenses to be less than 81% of pre-pandemic levels. More than a third (36%) expect their post-pandemic travel expenses to fall to 60% or lesser.

In addition to concerns about COVID-19, surveyed CFOs also expressed worries about the potential for increased taxes and regulation.

Original article from Wall Street Journal