From a CFO’s standpoint, the past year has seen an unmistakable change in the metrics and key performance indicators (KPIs) that matter most to businesses and their investors.
Bitpay CFO Jagruti Solanki, COVU CFO Subodh Karnad and Riskonnect CFO David Rockvam told PYMNTS that can be seen in how firms are moving from a sole focus on revenue and growth KPIs to placing a greater emphasis on profitability and financial returns — all while keeping a close eye on the expense pool.
“I feel the world in some ways is returning to more fundamental analysis and metrics, which often happens in tight times, [unlike] in euphoric times [when] metrics [tend to] go all over the place,” COVU’s Karnad said. “I don’t think investors have an appetite right now to absorb [any other] metrics.”
Rockvam added that there’s also a shift towards consumer facing KPIs, like understanding customers and increasing customer satisfaction, and companies making an effort to keep adding the features and functionalities that their customers desire.
When it comes to digital assets, merchant clients are reluctant to accept or hold bitcoin on their balance sheets because of the volatility risk and the high processing fees involved, choosing instead to settle payments in fiat currency and access funds in real time.
Solanki said companies like BitPay have stepped in to shield merchants from that risk exposure, while locking in rates for 15 minutes to give shoppers enough time to process crypto payments without concern over price changes during that time window.
To be able to do this effectively, she said it all boils down to having a healthy balance sheet: “As a company, it is very important to have a strong balance sheet, not just because of the volatility and working capital needs, but because our merchants and consumers want to work with a company that can get their money back at any given point in time.”
Navigating a ‘Change on Top of a Change’
The pandemic has no doubt changed how businesses operate, and it will continue to influence how payments evolve, whether it’s through bitcoin, other digital currencies or instant payments in Europe, the executives told PYMNTS.
Moreover, this period of a major macroeconomic crisis following a crippling pandemic, which Karnad characterized as “a change on top of a change” is one that many CFOs haven’t seen before and will require a creative approach to keep on top of.
That will include being open to innovation and experimenting with new payment methods, for example, while keeping a close eye on mitigating risks like fraud or error management.
“The circle of innovation started to accelerate over the last couple of years, and with all these new demographic changes, economic changes [and] technology changes, [that] acceleration will happen even faster,” Karnad noted.
For Solanki, the role of a financial team as a “support system” to the rest of the company will be more crucial moving forward, and CFOs can add value to their organization by helping other departments make faster and relevant data-driven decisions.
“[CFOs] have to spend some time and resources to streamline the data [and quickly] create something meaningful out of it. I feel [there’s] more room for innovation on that side to help decision-making throughout the company,” she said.