For the top chief financial officers, finding ways to improve overall company performance calls for more than just knowing the latest trends and theories. It requires stepping up strategy-formulation and decision-making process while being firmly in touch with reality.
Obviously, even the best CFOs cannot succeed without help. As the role of CFOs continue to widen in scope, so does the assistance CFOs need.
Finance teams must also up their game in order to provide the necessary insights a CFO needs in order to steer the company ship better in murky waters.
Below are the 5 finance-driven questions for CFOs that can aid in finding ways to improve company performance.
- Does your company have enough capital for planned growth?
CFOs usually think about different ways to grow and this growth can either be organic or through M&A or both.
However, the more important question for a CFO is whether or not there is enough capital available in order to sustain the planned expansions. A CFO must make sure that the organization has the necessary processes and decision-making strategy for capital allocation in order to truly support growth.
- Are you able to model different scenarios in your company in order to weigh risks?
What usually keeps the best CFOs up at night is uncertainty. CFOs and their finance teams constantly think about the biggest uncertainty there is and how to possibly navigate or overcome it.
This is a classic example of the CFO needing the help of his or her finance team. A CFO usually asks his or her FP&A team to model various scenarios in order to check its potential impact to the business.
It is through what-if analysis or scenario modeling that risks arising from uncertainty can be assessed better.
Therefore, CFOs must make sure that they have the ability to do scenario modeling for improved risk assessment.
- Which company spending is generating the least return?
CFOs must not only monitor spending, they must find ways in order to streamline this spending and ensure that there is clear return.
The best CFOs usually look for ways to get the most out of their spending by measuring returns from each spending made. It is therefore important that there is clarity and accountability on the spending so that small, easy wins can be constantly made.
- Is the company ready for a potential disruption?
There is a great deal of things expected of a CFO and one of that is an ability to foresee potential disruption. It could be a potentially disruptive technology that changes the game in his/her industry, an unexpected merger from competitors or a new, aggressive competitor that enters the market.
In order to drive company performance and to make sure the company stays afloat in difficult times, a CFO must always ask himself/herself what could be potential disruptions in the market, how the company can survive it and model consequences of various outcomes.
FP&A capabilities in the finance department must allow the organization to model potential disruptive scenarios and the corresponding responses of the company.
- Which line/unit of business needs to be disposed?
As they say, not all business units are created equal. Some are more profitable than others. It is therefore important that a CFO has full control and view of which business units are not generating the expected returns so that it may be disposed of.
Doing this frees capital and resources in order to give these to more profit-generating units.
One of the ways to ensure that a CFO and his or her finance team is effectively capable of doing all the tasks that can help improve company decision making is by adopting a technology that can aid them in their FP&A process.
Performance Canvas Financials is a complete, cloud-based FP&A solution that can be installed in as fast as 5 minutes. This FP&A solution allows companies to streamline and automate their financial reporting&analysis, budgeting&planning, forecasting, financial consolidation and metrics management.
Activities such as driver-based budgeting, rolling and live forecasting, what-if analysis or scenario modeling are all possible with Performance Canvas. It is a platform that is easy to install, configure, use, upgrade, and maintain.
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