Challenges Before A CFO In Today's Business Environment

K V Ganesh, Group CFO & President - Finance, TVS SrichakraGanesh has over three decades of C-Level Finance Leadership with demonstrated history in multinational corporations, with focus on raising both debt and equity funds, mergers & acquisitions and corporate governance. He has been honoured as one of the Most Influential CFO's in the country by the Chartered Institute of Management Accountants, UK in 2016.

The role of the Chief Financial Officer (CFO) has been undergoing such a rapid change over the past years that one would have to literally do a deep dive to understand the varied expectations from the person who is donning such a role. If at all, something is definitive, it is disruption to the methods that one would have got accustomed over the past decades, which probably needs to be understood and overcome. Every year is a new challenge and plans laid down go hayware. Expectations keep mounting from all stakeholders to be at the board level, the investors, lending institutions or for that matter one's own employees. The CFO has a most enormous challenge of at least meeting all expectations if not to better them. Nine out of 10 times matters being handled efficiently do not matter, as much as not meeting the one not addressed properly. And if the corporation is a listed one, then the regulatory challenges surmounts to mind-blowing proportions given the legislations which have been enshrined in the recent past noteworthy being the Companies Act 2013, Clause 49, GST, and the Insolvency & Bankruptcy Code.

What makes the job that much difficult yet challenging?
It has become a highly competitive world, so the first job of the CFO would have to make sure that the overall direction set as business targets are defined and articulated properly. He would have to play the role of the gatekeeper when it comes to aggressive plans being set by the Business Heads. Having defined that at a broader level, it becomes the job of the CFO to then enable the
achievement of the same. Companies do enlarge in new activities, newer geographies which many a times look good at first sight. One could potentially experience difficulties in collections so there would be no case of expanding into zones where one does not see the colour of the money in time. New product launches many a times gets introduced in a hurry, where the CFO's role has to be extremely crucial to make sure that without a ROI/IRR crossing the Internal Hurdle Rate no new launches get underway. There might be very uncomfortable situations happening where there could be major conflicts happening between the Business Heads and the CFO based on acceptability/rejection of proposals. A sense of logical reasoning has to prevail when deciding on the 'go or no go' decision. Many a times easier said than done!

CFO's have a fiduciary responsibility to the board and all the other stakeholders, including the investing public to make absolutely sure that the focus of ensuring ethical & professional practices remain as much important and visible as the ability to generate profits

Business Intelligence/Analytics is mushrooming into areas which none could afford to ignore. Decision making in today's context has to be based on data that are future beholds. BI tools gives permutation which enables one to prepare oneself for any eventualities for today’s dynamic environment. One should be able to forecast disruption much ahead of time lest the business itself could get wiped-out in a hurry. Traditionally-run organisations are generally run on their gut feel, but surely there is a paradigm shift in that approach at present. We have seen unfortunately many examples of multi-billion dollar corporations slip in this area, where the business model itself gets outlived with an offering which is far more enticing to the buyer.

Corporate Governance has assumed tremendous importance in today's environment. Social media is very active and gender discrimination of any sort is shunned by everyone concerned. Corporations want to be aligned to best employment practices and so cannot afford negative publicity on any count. Even the slightest board room battle gets magnified and investor perceptions takes a beating on account of that. Most of the new-age companies compete amongst themselves to be proclaimed as the best workplace in order to attract the best of talent. It is a challenge not just amongst the HR heads, but as a corporation as a whole.

To sum it up, CFO's have a fiduciary responsibility to the board and all other stakeholders, including the investing public to make absolutely sure that the focus of ensuring ethical & professional practices remain as much important & visible as the ability to generate profits. Both co-exist and it is the job of the CFO to make doubly sure that it indeed is the case in the corporations which they are associated with. At times, the CFO's might find themselves into a lonely spot but it is Hobson's choice which they need to appreciate and embrace. More they do this and also swiftly they would not only find the job interesting and motivating, but also something where responsibility becomes a part and parcel of their professional life.