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How the pandemic affected the CFO role’s opportunities and expectations

Posted by Shivali Anand

March 9, 2022    |     6-minute read (1016 words)

While the globe continues to deal with the long-term impacts of the COVID-19 pandemic, CFOs have been grappling with accompanying difficulties, ranging from cash flow issues, declining sales and poor employee mental health to counseling the board and CEO on strategic options.

In fact, the CFO role has evolved into one of greater strategic influence and problem-solving, due to the impact of projected tax changes, regulatory policy changes, workforce issues and cultural transformations to the bottom line. As their role expands, CFOs who link the company’s mission to action are positioned to accelerate and sustain company performance. 

In the midst of this uncertainty, the CFO can also play a critical role in stabilizing the company and positioning it for a better future when conditions improve. In the end, the CFO is the person who has the strongest direct impact on the financial health and resilience of a firm.

For today's CFOs, this is how 2022 may take shape

According to PwC’s The evolving role of the CFO report, six issues will likely be high on CFOs' agendas this year. The list serves as a commencing point for CFOs in determining where they should concentrate their efforts in 2022.

1. What the future of work will look like –

CFOs will need to address a tight labor market, new working patterns (remote and hybrid) and changing employee expectations. Finance executives must recognize that employees are seeking greater meaning in their jobs and team up with human resources leaders to show employees that they are valued.

According to a Pulse survey, CFOs are confident about growth while also renewing their focus on people. They report that collaboration with the chief human resources officer is critical in integrating workforce strategy into business strategy, especially when new hybrid models arise. CFOs will need to figure out what their employees want and build an employee experience that sets them apart.

2. Acceleration of change

– CFOs have kept a laser emphasis on digital transformation throughout the pandemic. Many protected digital initiatives from cost cuts by reallocating resources and even speeding some projects up.

To accelerate growth, a significant percentage of finance executives are investing in digital transformation, including cloud and analytics technology. By presenting the company's cloud narrative, CFOs can lead the cloud value story with the CEO. They have the ability to target capital commitments, assisting in the development of long-term growth initiatives.

The pandemic also brought to light several problems with linear supply networks. CFOs must recognize that modernizing company processes is a desirable path to future development, as supply chain difficulties and worries about competitive wage increases and high turnover continue to demand attention.

Long-term goals for safeguarding data in 2022 should focus on further digitization efforts as the focus on business process standardization grows. Sophisticated analytics, AI applications and cloud technology, the backbone of advanced financial tools, are all required for enterprise digital transformation.

Finance chiefs may need to budget for the expense of hosting cryptocurrencies as more money pours into them. Mentoring, digital upskilling and apprenticeships should also be part of CFOs' goals for this year as human functions merge with technology.

CFOs must address and optimize fragmented supply chains by converting linear supply chains into self-contained supply chain ecosystems. Diversifying supply chains, moving to local suppliers and stockpiling goods as a backup can help prevent future interruptions.

3. Establishing trust and a sense of purpose –

One of the most significant facets in an organization's capacity to develop and compete has been and continues to be trust. According to The Complexity of Trust survey, two jobs top the pack in terms of who owns trust, meaning who is responsible for or accountable for trust: the CEO at 73% and the CFO at 65%.

The CFO's increasing realm of responsibilities now includes company-wide activities, particularly in terms of openness, assurance, accounting and reporting insights.

Preventative action is needed in areas such as cybersecurity and data privacy. To establish a successful and coordinated approach, CFOs must carefully determine the top objectives of their workers and customers and be meticulous in integrating their company's trust strategy into its business plan.

4. ESG

– Environmental, social and governance concerns are still at the top of corporate executives' priority lists. Companies that prioritize their ESG strategies will be positioned to lead as many stakeholders see ESG initiatives as a window into future business performance.

Finance leaders will concentrate their ESG efforts on standardized reporting metrics as ESG gets traction and attention at the C-suite level. They understand that telling a consistent and engaging story about their company's impact is critical, and that obtaining investor-grade reporting is a significant step forward.

Companies must distinguish among their ESG strategies' environmental, social and governance components. To that end, CFOs must examine and understand how each of these factors influences the company's overall strategy, operations and reporting.

ESG reporting and transparency initiatives may also assist in building confidence in the workplace and provide reliable data for budgeting choices. Diversity and inclusion efforts are gaining traction, but social mobility and wage fairness are also becoming increasingly crucial.

5. Taxes, risk and regulation –

In the face of ever-changing tax policies and risk and regulatory landscapes, CFOs confront a problematic task: predicting and preparing their firms for the unexpected.

The pandemic has increased the rate at which risk events occur and the amount to which they affect regulatory change. This will necessitate CFOs' planning for possibly challenging circumstances. They must collaborate with tax professionals to educate other business executives, the board of directors and the rest of the firm, as well as position their organization to adapt to changing laws and regulations.

6. Enabling growth –

Last year, CFOs focused on overcoming constraints such as negotiating tangled supply chains, people management and digital and financial change.

As companies seek value, merger and acquisition activity has taken off. While some distressed firms sold assets to raise cash, others used the opportunity to restructure their operations, narrow their portfolios and accelerate change.

Now is the time for strategic planning, including cross-functional collaboration across businesses. Forecasting income in various circumstances necessitates precise data.

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