Finance Future-ready

What’s The Future Of Finance?

Finance has changed in the past 18 months due to COVID-19. This change wasn’t entirely brought on solely by the pandemic. We’ve been seeing a shift in recent years following a multi-decade transformation where corporate finances are no longer viewed from the rearview mirror, but from the windshield.

Things are not slowing down either. The CFO Whisperer, as David Axson is called, says uncertainty is the name of the game. In many cases, once one is finished, you start on the next generation transformation, be it data warehousing, process reengineering, digital or whatever else. There’s always something on the horizon.

However, David has seen two major changes spurred on by COVID-19. First, finance professionals are more liberated now as they can look to the future rather than looking backward. This is due to automation. And, secondly, because finance is no longer limited to just closing the books at the end of the month and generating financial reports, it’s much more integrated into the overall business.

Finance is coming out of its box, David said, and I agree. I’ve seen this too. CFOs are telling the financial story, and that means the CFO and CEO must work together more than ever before. The value proposition is better understood now.

Since the pandemic, collaboration between the finance department and other executives has actually improved. It’s been a forced interaction but, as he said, this remoteness has really helped people to create opportunities to engage with one another versus ignoring someone who’s always been just down the hall.

And that’s this idea of value partnering that I really love. Last year, I remember reading a survey that said finance teams were being asked to do projections quite a bit more than they ever before, which put them in a unique spot. The CFO is also usually the most trusted person in an organization. This sets up the finance role to be the co-pilot for the organization. Then there’s the technology that is accelerating a lot of change. David has a wonderful anecdote about technology liberating finance professionals from the tyranny of the spreadsheet. Finance professionals spent so much time in the numbers, there was little time to actually have a dialogue about the numbers generated. So now that the trust element is there due to value partnering, and technology has caught up with the profession, finance professionals can use more creativity and innovation. Those two words have not traditionally been in the job description of financial professionals, but they are now.

Despite the excitement around having the pulse on many different parts of the business, David also cautioned not to lose sight of the primary role in finance: to ensure the integrity of the financial statements. To lose sight of that means to lose sight of the role’s primary mission. Stewardship is and always will be essential.

Finance is evolving from bean counters to bean growers. When a finance department invests for growth, there are a couple more areas to focus on, David said. The role of finance has changed significantly in terms of investment appraisal and capital allocation. CFOs need to become comfortable pivoting if, in six months, an investment is no longer viable. The second piece is around cash and capital management. Does the company have what it needs in terms of working capital and investment capital to support growth initiatives? These shifts basically mean that CFOs have to take a much more active role in the business.

Then there are the intangibles, things like brand value, network value and customer enterprise, that weren’t traditionally recorded in the balance sheet. David’s view is that they are tangible assets even if we don’t have the perfect measurement mechanisms for them. As financial professionals, David stresses that we have to be comfortable with intangible asset management and making investments in intangibles, where outcomes are uncertain. This is how financial professionals will be effective in the modern world.

It’s not that any of these changes are new. It’s just that the finance profession’s evolution has accelerated, and CFOs need to keep up. We are still in the early stages of technology adoption, investing in talent, upskilling and teaching our finance professionals how to deal with uncertainty and ambiguity. When we look into the crystal ball of finance, we can see that if you automate, you must also elevate your team’s skills. Talent will be the differentiator in the finance department of the future.

Stay tuned for more tools, skills, and thought leadership and follow us on this blog and LinkedIn Hashtag #FutureofFinance.


Thomas Hood