Running in parallel with this, CFOs acknowledged that investment in tech is critical.
- Prior to the Covid-19 outbreak, 22% said that investing in new technologies would be their top area for investment, making it the number-one priority across businesses.
- Even when the survey was conducted for the second time, that figure stood at 21%, second only to working capital, which, understandably following the economic consequences of the Covid-19 pandemic, rose to top priority at 30%.
Data Visualization and Real-Time Analytics
Effective, user-friendly data visualization tools allow CFOs to keep an eye on real-time performance data. Insight from that data drives transparency and accountability throughout the entire organization so challenges and opportunities for investment can be quickly identified. These visualizations allow you to continuously monitor key performance indicators, profitability (and potential profitability), risk, and important patterns or trends, without the need for time-consuming manual processes.
Actionable insights gained from data visualization can help CFOs identify potentially profitable new clients, markets, partnerships, research and other investments, and guide business decisions with the lowest risk potential and highest likelihood of reward.
Top CFO Concerns and Challenges in 2020
Finding and Retaining Talent
Building out an effective financial team is becoming increasingly challenging in the modern business environment. Ideal candidates should have a great deal of experience and expertise in data and analytics on top of sophisticated accounting, auditing and compliance knowledge and skills. As a CFO, you want to assemble a team of people who understand and embrace the latest technology and tools, like artificial intelligence and data visualization, and who have the flexibility to learn and integrate new programs and processes as the need for them arises.
Cybersecurity is a major concern for every business, as breaches can lead to devastating financial consequences for organizations and their stakeholders. Nearly every exchange of information, communication and technological integration comes with some level of cyber risk, so making investments in robust and reliable data security and privacy are priorities for the CFO.
As the head of the finance team, you need to make sure your entire team understands and engages with protective measures and strategies to guard against phishing, hacking and other external attacks. You also must monitor data security compliance among all employees within the organization. In addition, it’s imperative to stay up to date with compliance laws and regulations to minimize company risks and guide strategies that ensure continued profitability and accountability.
Costs regularly exceed revenue for growing businesses, due to the rising cost of wages, salaries and benefits, capital expenditures, regulatory changes and compliance updates, IT and cybersecurity upgrades, as well as external economic uncertainties. CFOs are regularly asked to manage these costs in response to investor pressures and the competitive goals and strategies of business leadership. Cost-control measures to help ensure profitability are a delicate balancing act, as putting off capital investments, recommending layoffs or switching to lower-quality vendors could have negative long-term effects on the business.
The COVID-19 pandemic has created uncertainties in nearly every market, adding to the challenges faced by CFOs. Concerns about a global economic recession, altered operations due to lockdowns and social distancing mandates, and changes in consumer behaviors all contribute to a much different business environment. Client bankruptcy and non-payment are real risks that CFOs must find ways to mitigate. Trade credit insurance is one way to do so.
Credit insurance coverage protects businesses from non-payment of commercial debt. It makes sure invoices will be paid and allows companies to reliably manage the commercial and political risks of trade that are beyond their control, ensuring that capital is protected, cash flows are maintained, loan servicing and repayments are enhanced and earnings are secure.
Payment Delays Due to COVID-19
The pre-pandemic world for finance leaders was broadly positive. But that does not suggest that there were no risks or concerns.
Euler Hermes researched what risks were top of mind for finance leaders. Potential risks, ranging from fraud and cyber security, to drops in sales and supply chain issues, were all considered. But the risk that had most impacted businesses over the last year was something different: payment delays.
Payment delays have accelerated to become an even more significant issue in the current climate. When asking finance leaders in May which risks had impacted them over the past two months, 65% mentioned payment delays. While risks around sales volumes saw the largest increase since pre-pandemic results (61% said this had impacted in the past two months, compared to 25% in the year prior to that), payment delays remained the most common area of risk.
Learn How CFOs are Pivoting Strategy in 2020
Learn the top concerns shared by CFOs and other financial leaders when it comes to political, economic and cash flow uncertainties in the face of the COVID-19 pandemic. Risky Business: The CFO Perspective on Trade Challenges offers insights from 250 CFOs and their direct reports, pertaining to their greatest concerns stemming from the COVID-19 crisis and economic uncertainty. In this report, CFOs weigh in on how late payments and default situations disrupted their businesses, and what costs are associated with strict payment terms and a conservative risk posture.