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New Year, New Finance?

2016 may brings signifcant challenges for CFOs, we look at four

8Jan

We are now into 2016 and firms are looking square down the barrel of the end of the financial year. For CFOs, it can be a very stressful period, and there are a number of things to take into consideration.

The amount of stress that a CFO is likely to experience correlates directly with their level of preparedness. The main focus for the CFO is ensuring that there are no surprises lying in wait for the company directors. All revenue and costs that are reported need to be in the correct fiscal year, and there must be as few errors and omissions in the financial data as possible. Technology and automation software is playing a significant role in this happening, taking the element of human error out of the process. It also means that CFOs can have a better idea of how the business is performing throughout the year, and they can employ things like rolling forecasts and real-time reporting to keep check on margins and earnings.

CFOs must also look at the general risks to the business, so that steps can be taken to mitigate against any potentials shocks to revenue. For 2016, the risks are many. These include:

A major overhaul of the U.S. tax code

The GOP-led Congress has been making noises to launch a review of the tax code that CFOs will have to consider should it be enacted. CFOs will need to make sure that they have the right technical accounting and tax expertise in place. This could be difficult however, with a dearth of talent available in the finance function. For CFOs, they must look to have a good recruitment system in place, and consider setting up a financial center of excellence so that the employees have the right skills to cope.

Brexit

Britain remaining in the EU was cited as being in the best interests of UK businesses by 62% of CFOs who responded to a Deloitte survey of risks to business in 2016, while just 6% answered that it wasn’t. The remainder either didn’t know, or said it was too early to say. This is a significant drop in the number to express concern, down from 74% of CFOs who said it was in their best interests last year, and just 2% who said it wasn’t. There is a high chance that the UK government will call a referendum this year, with the odds currently 2/5 that the public will vote in favor of remaining, and 7/4 for voting that they will vote to leave.

Cybersecurity

A Protiviti survey of 650 CFOs, vice presidents of finance, corporate controllers, and other finance management professionals found that the top priority for CFOs next year is margin and earnings performance, followed by cybersecurity risks. A recent Grant Thornton survey identified the CFO as the position within the organization most often said to be responsible for cybersecurity (38%), followed by the CIO at 36%. CFOs must work alongside their CIO to introduce measures that will prevent breaches, and put in place a strategy that helps deal with them immediately.

New technology

Cloud, mobile and other technologies can help Finance organizations become more flexible and efficient, and CFOs need to be aware of how these can help positively impact revenue. Missing out on new technologies can cause a business to lose their competitive edge, and finance leaders must not only ensure their function has the best tools at its disposal, but that they have budgeted properly and are receptive to the technological demands of the rest of their organization.

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