The Top Five Things That a Modern CFO Prioritises

A modern CFO’s priorities have undergone a shift over time from ensuring accurate record-keeping, reporting, and regulatory compliances to now utilising financial data to build business strategy. Of course, that does not go to say that record-keeping and reporting are not important anymore. They are. But now, they are only a subset of the broader range of things that occupies a CFO’s mind space.

So, what can we say are the top five things that a modern CFO prioritises:

Creating monetary value

Mitigating costs and building strategy to improve revenues and profits will always be one of the primary areas of a CFO’s focus. With businesses taking a hit due to the pandemic, it calls for adept professional thinking to find the initiatives that will create the highest value. Of course, improving the margin on existing business operations is also key. The scope has now broadened beyond just production costs, overheads, capital expenditure, salaries, etc., into newer avenues for cost control.

Further, given the economic uncertainties and the dynamic changes in the regulatory landscape, modern CFOs are now looking at digitising critical business functions to optimise costs and drive growth. Ultimately, every CFO wants the value created to reflect in the bottom line.

Ensuring seamless business and tax compliance

In a country with an ever-changing regulatory environment, there is nothing more a CFO can ask for than seamless business compliances, and that includes tax compliance too. The Indian government has taken a no-nonsense approach with compliances – the stream of demand notices, penalties and GSTIN cancellations are a clear indicator. And whether the business is a startup or an established enterprise, no company wants to be on the wrong side of the law.

Hence, businesses in India need to move to a real-time, proactive approach to ensuring compliance rather than the reactive approach used in the past. The penalties are hefty, and no company wants to risk their GST registration being cancelled. The CFO role now involves taking an active part in mitigating the cost of non-compliance, finding areas for tax optimisation, and bringing in digital tools to ensure organisational resilience amongst the changing compliance landscape.

Data visualisation and real-time insights

Getting real-time visibility into financial insights is every CFOs need of the hour. CFOs want financial information on tap to not just assist the finance function in decision-making but to provide key insights for overall organisational strategy. Data visualisation helps in monitoring performance, indicating areas of profitability, highlighting trends, etc. When it comes to compliance, CFOs want data analytics that identifies challenges and flags discrepancies even before they become issues. Data analytic tools are more powerful now than a few years ago and can really help CFOs make better decisions faster.

Enhancing liquidity 

Mitigating costs to improve profitability is a major aspect of the CFO’s role, but the modern CFO also prioritises unlocking working capital and enhancing liquidity. Cash is necessary for any business to survive. Exploring new opportunities to enhance liquidity has become one of the biggest areas of focus post the pandemic. A rather untapped area, for instance, is tax optimisation. While CFOs of ten or twenty years ago focused on tax compliance, the modern CFO prioritises tax optimisation. With the right digital tools in place, tax optimisation has become one of the trending areas for improving liquidity for an enterprise.

Digital transformation

Almost every modern CFO uses technology in different ways in their organisation. It is hard to escape digitisation, no matter the size and scale of the organisation. In fact, the pandemic was the ultimate push for digital transformation. CFOs are making use of compliance tools like one-click return filing, AI-based data reconciliations tools, automated communication and payment management solutions to digitally transform their business. There are even new technologies brought in to deliver value across accounts receivables and payables management, supply chain financing, and tax compliance, amongst others.

The priority of a CFO is to remain compliant, mitigate risks, and enable growth with the least possible effort, and the only way to achieve this is through digital transformation. Of course, understanding technology trends and incorporating them is important, but delivering organisational value via digitisation is key.