CFOs Seek Balance Between Rapid Change, Long-Term Planning

The time when companies could confidently make five-year strategic plans passed with the pandemic, according to Jeff Barker, chief financial officer (CFO) at Parachute Home, which sells bedding and other home goods.

CFOs must be nimble and quick, along with the entire enterprise. This is especially true in the dynamic retail sector in extraordinarily uncertain times. Yet, they must put in place the infrastructure that can keep their corporations on course toward long-term goals.

“I’ve been doing this for over 20 years now, and back then we were doing five-year strategic business plans,” Barker told PYMNTS in the latest in a series of conversations with digital-first CFOs. “Then about five, 10 years ago, it became three years. Now, it’s like one-and-a-half year plans, given how things are changing.”

Barker cited marketing as an example of the necessity for nimbleness. In the current environment, with demand projections challenged by uncertainty about a potential pullback or recession, his company adjusts its marketing spend on a weekly basis.

Barker came on board in January as the first-ever CFO in the company’s 10-year history. His marching orders from CEO Ariel Kaye were to bring financial operational prowess to make sure the company continues to grow but in a very thoughtful way from a profitability and a cash generation perspective.

“It was a bit of a mixed bag in ensuring we continued to enable that growth from a financial and operational perspective, but also with a very keen eye on the future, ensuring that we were future proofing elements of our business in a thoughtful, step-by-step way,” Barker said.

His mission is to structurally set up for success. Barker has assessed whether the firm has the right technology stack to support the target level of growth, knowing that there will be larger scale, while ensuring profitability.

Multidimensional Growth

In 2021, Parachute experienced over 60% year-on-year growth, driven by the pandemic nesting phenomenon, which played into its strength as a high-end home décor retailer. This led to multi-pronged expansion initiatives involving expanding from eCommerce distribution into retail and some elements of wholesale as well. In addition, the company undertook categorical expansion, according to Barker.

Parachute has been very data and technology driven since its inception, he said. However, the expansion into offline distribution challenges created opportunities for digitization and automation.

At the moment, these B2B relationships don’t have an automated process, so invoicing is handled manually. Given his background, which is more wholesale driven, it’s something that he’s starting to automate because of the many benefits, not just from reconciliation and timely merchandise delivery, but also from an internal workload perspective.

“One area that we’re starting to improve is the B2B side,” he said. “We’ve really expanded our B2B relationships. And that’s an area for us that we will continue to evolve is a company that’s really been built on the B2C side. There are some areas that we’ll continue to automate on the B2B side. And that’s something that we’re working on right now.

Given the challenge of hiring people, Barker agreed with many of his colleagues that achieving digital escape velocity from manual accounts payable (AP) and accounts receivable (AR) processing plays a role in staff recruitment and retention.

Investment Priorities

The limited visibility that has cut short the strategic planning timeframe makes nimble investment prioritization paramount, Barker said.

“In the back half of this year into next year, we are really prioritizing where this company goes next and where we can invest,” he said. “That allows a very deep understanding of what those priorities are, and then what we expect as a return when we do those things.”