by Mr. P. S. Kasi Viswanathan, Chief Financial Officer.
The role of the CFO in any company has changed dramatically in recent years, more so in services industry where being cost competitive is the key to business growth. For CFOs to deliver value, they must play a larger role and work innovatively to overcome external pressures and fund new investments.
Compliance and Risk Management– A top Concern for CFOs is to effectively manage risks and fully compliant in nature. Increasing growth and margin expectations coupled with changing regulations are constantly complicating the risk situation. CFOs should have a keen understanding of the many risks that the organisation faces and put processes in place for effective risk management and efficient internal financial controls so that the organisation is fully compliant with all regulations.
Efficient Working Capital Management– This remains the most important role as it has the potential of guaranteeing long-term success. Sound working capital management practices can give free cash flow for better funding and redeployment aspects. With the right analytical tools, visibility and better insights can lead to better understanding of the true financial state and management is able to take informed decisions.
Financial planning & Analysis – CFOs must perform financial analysis and formulating financial plans and strategies for achieving macro level objectives of business. He should also analyse and understand how various data helps to address profitability goals. For eg. while leasing helps mitigate risks of obsolescence, accommodating the dynamic nature of business requirements, final decision should be made based on whether the same will affect a core business activity and what would future business needs be.
Stakeholder Relations– CFOs are increasingly becoming the face of Stakeholders’ like bank and investor relations. Strong and positive relations with bankers will result in a better negotiating terms and faster loan disbursals in adverse times. Another very important aspect is managing investor relations by giving timely well-structured reports and presentations. This builds trust in a company’s financial performance.
Organic / Inorganic Growth– As CFOs take on more strategic responsibilities, achieving sustainable growth is the most pressing challenge. CFO needs to be an expert deal maker and an excellent integrator. With the organization, CFO should also mature in the art of buying, selling and integrating businesses. After all, M&A is much more than numbers, it should be value accretive.