As companies attempt to recover from the effects of COVID-19, finance teams are universally struggling to keep up with limited resources for juggling daily tasks and strategic projects. For an enterprise to be resilient in the face of crisis and change, the C-suite needs to maintain and strengthen financial performance through strategic and operational planning.
In this month’s CFO report, OpenEnvoy connected with CFO and Founder of Hurd House Advisors, Dan Piscatelli to explore how finance executives can narrow down on the most impactful initiatives, reduce the workload of their teams, and remain nimble to industry developments.
Maximize Meaningful Business Growth with Long-term Planning
“Trying to balance your financial constraints while keeping an eye on what is going on longer-term can be at odds…companies need a destination for where they are going. Constantly looking for the next shiny object is one of the biggest, most frustrating challenges for everybody, especially finance. You are working with limited resources, so making certain that the long-term is always in mind and knowing what you will and won’t do is monstrously important”, says Dan Piscatelli.
Successful long-term planning requires a deep understanding of the industry and the changes that could shape the future of business. The C-suite can identify the opportunities for value creation by predicting the needs of customers and stakeholders. During long-term planning sessions, CFOs can have great influence as they are the data experts of the C-suite. With the ability to normalize financial data, they can help determine what is needed to drive business value and beat competitors.
“In terms of data, finance teams bring rigor as they would in financial reporting to harmonize information and ensure that everyone looking at the data is speaking the same language. They have the authority to provide all stakeholders with the same set of rules across time and across the organization, creating a much more robust analysis. As business analytics becomes increasingly important, finance departments can take leadership in their organizations to determine how performance is measured. It is all about normalizing, standardizing, and reporting information.”
The finance function can set the pace for longer-term conversations amongst the C-suite that develop the company’s strategic vision and can create a clear financial baseline for strategic goals.
Implement Tactical Changes for Immediate Performance Improvement
After leadership agrees on a long-term strategic vision, they need to specify steps to push the organization forward. CFOs can move the needle by determining which initiatives drive value to the bottom line and which initiatives fall short of achieving operational improvements. Too many projects can exhaust limited resources and offer little benefit in the long term. To capture daily wins, leadership should eliminate initiatives that no longer serve the company and reallocate those resources to fewer, higher-value projects. CFOs can leverage financial data to make operational improvements and partner with others to improve cross-departmental efficiency and communication.
“CFOs can make sure not to lose sight of the long-term by setting KPIs and building metrics for reporting. Feed everybody the right information, and make sure it is distributed across the company. It is a democratization of data and gives everyone in the organization access to what they need to help them move forward. The CFO can also help other departments leave strategic meetings with performance targets and guidance on how to budget for those goals.”
Regular planning may be needed to keep short-term goals relevant, but more frequent sessions allow the company to stay flexible and capitalize on opportunities when they arise. CFOs can also look at the operational performance in their back office to uncover hidden inefficiencies.
“As a CFO, being in operations and keenly aware of margins, a company can be put in a bind in the short-term by only focusing long-term. The beautiful thing that has happened in the last 20 years is companies like OpenEnvoy have allowed organizations to be flexible, especially on the finance side. A lot of times I’ve seen when there are issues operationally, it is a clue to look in the back office. When processes are not completely automated, it can get to a point where growing the business becomes difficult, and you have to throw more people at problems when instead you could automate.”
Automation enables finance teams to accelerate manual tasks like invoice processing and account reconciliation to create more time for higher-value projects. CFOs and finance teams should be open to leaning on automation for manual processes and allocating their talent to more strategically important work.
Successful CFOs can balance preparing for tomorrow while achieving short-term results. In an ever-evolving business environment creating an effective strategy requires mapping a course with a straightforward destination and the dedication to making regular progress towards goals.