accounting & finance

CFOs’ (Chief Financial Officers) play crucial roles in a company – Be it a huge multinational company or an SME. Sometimes, having a good CFO can make all the difference when it comes to handling forecasting, financial instruments, attaining loans, etc. In today’s demanding, ever-changing, high volatility market, CFOs’ are often faced with concerns of their environment – Be it cost of energy, inflation, political administration changes and so forth.

We’ll take a look today at what are the few of the main concerns of a CFO – Especially when his/her forecasting service places so much emphasis on the company’s financial decisions: Go or not to go.

CFOs’ and financial conditions back then

More than a decade ago from 2009, high market volatility forces the nature of CFOs’ decision making to be more frequent, targeted, accurate and forecasting effectively and efficiently. Back then, business processes could live on and the corporate world could take a step-by-step process to achieve a business goal, strategy or maybe just method, as it’s low-paced, low volatility market (low penetration and activity). It should not be so already for companies that fall under the FMCG industry.

Back then, decisions could take months to make – Suffice to say quarterly or maybe in half-year terms. Product commercialization has reached consumers, technological advantages towards fast-paced communication and information transfer has led to a sudden decades-change we experience since the boom of Baby Boomers.

Today, CFOs’ could sit down with the entire management team almost weekly to discuss, amend, implement and revoke decisions or access, when crucial decisions are especially needed in such urgence. For the CFOs’, they have to depend much on their financial forecasting – Their horizon and frequency of business risks and volatility profile, application of financial and non-financial revenue instruments to calculate forecasting, instituting targets and so forth.

So, what are the concerns of a CFO?

Financial decisions, financial concerns.

Usually, there are two types of controllers – Internal and external factors in which some can or cannot be controlled by the CFO or the financial controller. Forecasting, which may be done quarterly, yearly, half yearly or monthly would probably be their main weapon in the armoury – Decisions weighed from political factors all the way to cost of non-fuel commodities.

These factors determine a CFO’s ability to forecast results accurately, as balancing factors surrounding a business often takes mere guessing or common data, key assumptions or revenue drivers.

External Factors affecting a CFOs’ concerns

• Inflation
• Consumer Demand
• Cost of Fuel (For energy hungry regions like the US)
• Credit markets and interest rates
• Political volatility and change of administrations
• Currency devaluation
• Financial regulations
• Market fallouts

What’s interesting to see is actually these few concerns vary from country to country, depending on their greatest financial gain. Reasons behind these financial gains are often spruced by a number of factors, including but not limited to political, internal pressure and leverage of resources.

And then you have the Internal Factors:

Internal Factors affecting CFOs’ concerns

• Talented, qualified employees and leaders.
• Supply chain risk.
• Ability to forecast results.
• Intellectual property protection.
• Weakness of balance sheet.
• Data security and managing IT systems
• Job security (if not owned partially)

If you look at the horizon of what CFOs’ look at beyond the scope of their industry (non-financial derivative), it takes a lot of practice, industrial experiences, knowledge and understanding to be able to obtain excellent forecasting.

A mismanaged or inexperienced CFO can give you more problems than solve.

Make sure you hire the right CFO for your company. An affordable one. Enquire to KLM’s CFO services.