No one disagrees that a firm’s finance, accounting and treasury operations are all very important.
But it is during a bad economy that they can really shine.
This, as CFOs and treasury teams are increasingly getting shout outs on this latest quarter’s earnings calls for their savvy management of firms’ funds.
That’s because to manage a balance sheet is to protect the heart of a company and direct the flow of its lifeblood.
The best CFOs and treasury operations are increasingly tasked with pulling the right levers to redefine success in a dynamic world, as finance department responsibilities evolve alongside business strategies.
Navigating a rapidly changing macro environment frequently requires an ongoing dialogue between the CFO and the business economics. Whether priorities lie with preservation of capital, wanting to earn yield, or something more specific to a particular business situation, real-time information sharing and agile cross-departmental alignment grounded by stress testing and forecasting are now table stakes.
There is an increasingly high-touch, vocal narrative around the pairing of strategic and investment roadmaps — with treasury and finance departments calling the shots in concert with other department heads.
And as the impact of the finance department moves to the forefront, so too does the CFO role.
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Treasury operations can build and maintain organizations prepared for anything.
UnitedHealth CEO Andrew Witty told investors on the company’s second-quarter 2023 earnings call Friday (July 14) that the more active role his firm’s finance department has been playing was crucial to helping the company post good results during a time of ongoing macro uncertainty.
“Investment income has been growing strongly as a result of active management by our treasury team by deploying more cash balances into interest-bearing accounts and advancing the productivity of that cash,” UnitedHealth CFO John Rex emphasized.
PYMNTS research in the June 2023 report, “The Treasury Management Playbook: Mitigating Risks and Maintaining Liquidity in Times of Change,” a collaboration with Citi, finds that finance and banking services are moving to real time, and the reality of evolving cash management practices increasingly requires systems that are more adept at coping with real-time data and strategies.
As Jeffrey Noto, CFO at global communications infrastructure provider Zayo Group, told PYMNTS, “it’s becoming a very blurred line [for CFOs] between where you need to have finance acumen and skills on one side, and where you need to have more technical capability on the other side to really balance the two out.”
That’s because business leaders today need to have a transparent, high-level view of their operations, one that informs where to continue to invest, where to pull back spending, and how to leverage modern technology to provide an optimal return on investment.
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An Evolving Role Centered Around Fundamentals
The evolving role of the CFO is something that PYMNTS has been tracking, as finance chiefs are increasingly looked on as strategic leaders responsible for roadmap planning, risk management, innovation and more business-critical initiatives.
This shift from “bean counter” to “business partner” has become more pronounced as economic uncertainty has businesses prioritize fine-tuning their financial operations, and digital solutions help broaden the reach and impact of balance-sheet-led corporate planning.
Applying intentionality and discipline to investments has never been more in vogue.
“Where you’re spending money, that’s the strategy,” Dean Neese, CFO at location intelligence solution Placer.ai, emphasized to PYMNTS.
“The cost of capital has gone up recently and that really heightens the focus on ROI [return on investment] in a way that maybe wasn’t as prevalent in a low-rate environment,” Pat Dillon, CFO at intelligent supply chain platform Flock Freight, explained earlier this year.
That’s why having a strong finance team in today’s environment can make a huge impact on the organization.
As Uri Zelmanovich, CFO at open banking FinTech Trustly, told PYMNTS, “every senior finance professional that successfully navigated the pandemic now realizes the importance of agility to the ability to react quickly.”
By working in step with other departmental executives, CFOs can define strategies for the future that build off of a strong cash position while at the same time protect flexibility.
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