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HOW FINANCE SETS THE PACE FOR BUSINESS TO THRIVE

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By Laura Wiler, Vice President of Finance and Business Operations, Sage

 

COVID-19 has added to the complexity of an already unprecedented year for finance professionals. While many continue to grapple with the challenges of the pandemic, great shifts are happening in the industry powered by technology, changing priorities and attitudes. To survive, and thrive in the future, business has to adapt and rapidly.

Yet who leads the innovation effort in an organisation? Despite the organisation-wide impact of the pandemic, the role of Finance cannot be ignored. With control over the company purse strings, the CFO has an instrumental role in driving the digital transformation so needed by organisations.

 

CFO 3.0

Juggling business continuity in the present with planning for an unknown future, a great deal depends on the CFO. Indeed, UK financial leaders consider the effects of COVID-19 to be the greatest threat facing their business, and by a wide margin. Yet what is expected of CFOs in this time of uncertainty?

Cashflow remains a challenge for many businesses, and the CFO – holding responsibility over the financial health and resilience of the business – is best placed to resolve it. However, financial leaders can’t just live in the now. Of course they need to make decisions that help the business survive for today, but they’re also responsible for ensuring it thrives into the future.

The CFO of the past was a historian of previous performance. Then they were an analyser of real-time organisational data. But CFO 3.0 has to be a visionary today. They need to have a long-term view of all their decisions, predicting how their impacts will change the business in the future.

Amid the ongoing uncertainty of COVID-19, this visionary aspect has never been more important. The decision to reduce headcount may ease cashflow challenges in the present, but it could also leave the business vulnerable and lacking the talent it needs to grow. Today’s financial leaders can’t just analyse and respond, they need to predict, lead and innovate. More than ever, they also need to display emotional intelligence and strong interpersonal skills – such as managing stress and lending support to colleagues working with them.

These changes have been rumbling on for some time – 95% of CFOs say their roles have changed significantly over the last five years, with 70% now given full responsibility over digital transformation. COVID-19 has been a catalyst, pushing the remainder into the role of change-leader across multiple business domains. CFOs can navigate this new direction, following the examples of the best global finance leaders and innovators.

 

Technology: a CFO’s best friend

Success increasingly lies in targeted, pre-emptive investment – in the channels, services and technologies that will deliver growth in the long term. The responsibility of driving through these upgrades for the finance function and beyond ultimately falls to the CFO. More and more, they are expected to advise the C-suite on the investments that will achieve their strategic goals and carry the business into the future.

To do this, financial leaders need in-depth, real-time insight. Gut instinct isn’t enough – advice must be supported by data that everyone has confidence in. Yet this data can be hard to unlock in the heavily siloed, poorly integrated IT infrastructures of many businesses. On average, small businesses use 40 different apps spread across multiple functions – increasing to 211 apps for enterprise-level organisations.

Different apps and data environments hold precious insight that helps the CFO spot crucial opportunities for growth and investment – but only if they can access them quickly and easily. Centralising organisational data in the Cloud creates a central repository of useful insight, accessible at any time and from any location. When the CFO has access to data from all functions – including HR, marketing and operations – they have greater power to spot valuable opportunities for the business and more time to take advantage of them.

Another benefit of the cloud-native approach is that it gives financial leaders access to the latest tools, which run purely in the Cloud and with no manual upkeep. As finance becomes more data-centric, leaders can find strategies that streamline the processes of data management.

The most effective CFOs use automation tools, embedded in cloud data platforms and utilising self-learning machine intelligence, to eradicate the need for resource-heavy manual labour. This gives CFOs more time to focus on understanding how the business moves and breathes, with an emphasis on the thing that makes all businesses successful – their people.

 

A team effort

It’s important to stress that tools alone won’t enable the CFO to achieve their digital potential. Increasingly, CFOs aren’t just leaders for change, they’re leaders of people. They need to mentor and be supported by diverse teams with core competencies in analytical skills, digital technologies and automation. Those with expertise in AI, ML and data skills will be the most valuable in driving greater innovation and efficiency.

To succeed in the present, CFOs should lead their teams on a period of transition. For the time being, they should invest in retraining or upskilling those who lack core competencies, while turning to ‘gig’ or contract workers to fill gaps as needed. The next objective should be to make the business an engaging and supportive environment that attracts the best people. As disruption continues, Finance requires flexibility, versatility, and a commitment to personal development to roll with the punches.

Technology may be the engine of innovation, but the CFO is its driver. They can identify and analyse the data they seek, and lead the charge in employing technology that will benefit the business holistically. Yet they can’t do it alone. Cloud technology, automation tools and a skilled, diverse team will empower them to achieve their true potential.

 

Business

HOW CAN BUSINESSES BREAK INTO MARKETS BEYOND THE EU?

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Atul Bhakta, CEO of One World Express

 

The build-up and aftermath of Brexit impeded the long-term plans of businesses both in the UK, and of EU businesses trading to the UK. The heavily protracted negotiations induced a culture of uncertainty in business, with few able to adequately prepare for all the future trading landscapes left on the table.

Once a deal was struck, with just one week before the Brexit deadline of 31st January 2020, organisations were then left scrambling to improvise new processes to translate their operations to the new systems and avoid spiralling costs, shipping delays, and various other disruptions.

As a result, businesses both here and in the EU saw a substantial trading slowdown in the months following Brexit, with new rules on customs checks, lengthy tailbacks at ports, denser and knottier administrative rules and new limitations on visas for the workforce all contributing to a tense trading relationship.

Indeed, the Office of National Statistics (ONS) figures revealed a precipitous drop in trading immediately after Brexit, with UK exports to the continent plummeting 40.7% year on year to January 2021.

This is a striking decline, given the historically close economic and cultural ties between the UK and EU. Inevitably, this caused a lull in long-term confidence amongst UK businesses. Indeed, a previous study conducted by One World Express in January 2021 found that 25% of UK companies doubted that they would last until the end of the year.

Atul Bhakta

Of course, Brexit is even now not a finalised issue – it will shift and evolve in significance and relevance as time passes and economies reshape; but the loss of confidence for businesses in UK-EU trade has been a tangible impact within the first year.

Accordingly, some organisations have begun exploring the scope for expansion into territories beyond the EU.

 

New opportunities attracting attention

As noted, the UK’s trade with the EU saw a sharp decline immediately following the formalisation of Brexit. While this decline has recovered steadily over the year, there has been an equally impressive parallel forming, as non-EU trade has remained mostly stable throughout.

Of course, UK imports from global markets have always remained at high levels, and when considering business growth and the economy as a whole, outward trade holds a heightened significance. On the export side of matters, ONS figures suggest that UK exports outside of the EU increased by 1.7% year-on-year to January 2021.

While a very modest increase, such figures indicate that international expansion could carry promise for business leaders, and hint at potentially lucrative opportunities within non-EU markets.

As 2021 progressed, it became evident that UK businesses’ appetite to explore opportunities further afield had grown. To take in the views of decision-makers, One World Express commissioned an independent survey of 752 business leaders in the UK, finding that 61% were either already operating abroad in some capacity, or had plans to expand into new territories over the coming year. More than six in ten (62%) reported Brexit as a key motivator in their decision to diversify beyond trading with the EU.

There was also some evidence that these plans were not solely in pursuit of the gains of modest uplifts in trade with non-EU countries. The survey found that more than two thirds (68%) of exporters had observed increased overseas demand for their products in the previous year, while 63% felt that markets outside of the EU were more willing to pay a premium for British-made goods.

The role of ‘Brand UK’ is significant here. For many years, products made in the UK have benefitted from the country’s reputation for high quality production and excellent service, which has driven a consistent rise in demand as emerging markets with high levels of consumer spending, such as India or China. In turn, UK businesses have found it easier than most to gain a foothold in new markets. Indeed, the majority (67%) of exporters reported their British brand had enhanced the reputation and demand for their goods and services when targeting international consumers.

Despite this innate – and highly welcome – competitive advantage, there are a number of factors UK firms must consider before diving in to unfamiliar markets.

 

The importance of planning

Many would be surprised to learn that a large number of businesses look to enter new markets with minimal planning in place. Notably, almost one third (32%) of exporters do not have such a strategy in place, which is likely to hamper the growth of British businesses abroad if left unaddressed. A crucial starting point for any international expansion plan lies in the research and relationship building.

Ascertaining the consumer preferences and audience behaviours in target markets, and forging appropriate connections with distributors, vendors, and ecommerce platforms, will allow firms to access consumers more easily, and in greater numbers, than marketing from scratch in unfamiliar territory. Encouragingly, according to One World Express’ research, 72% of exporters already include this in their plans.

UK organisations must also recognise the value of a robust and flexible logistics strategy. When products are being shipped to the furthest corners of the globe, there is a degree of risk if the finer details are not handled correctly. Delayed, missing, or damaged deliveries will erode consumer trust, and diminish the prospects of companies before they get off the ground. Accordingly, companies should ensure they have a transparent tracking system and efficient and user-friendly returns process. Investment in adopting the right software solutions to manage the shipping will create a streamlined and cost-effective process, affording firms the best chance at success.

Naturally, the EU will always be one of the UK’s most critical trading partners. However, as the dust settles on Brexit and the pandemic recedes into memory, the next few years present an interesting crossroads for the international prospects of UK businesses. With a tranche of new free trade agreements arriving in the near future, and international demand for Brand UK going from strength to strength, the scope for expansion into unfamiliar markets is growing apace. Provided business leaders get the finer details right, the rewards for bold investment in expansion could help charge a boom in the UK exports sector.

 

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WHAT FIREFIGHTERS CAN TEACH FINANCIAL INSTITUTIONS ABOUT DATA COLLABORATION

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By

Gabriele Albarosa, CEO, LiveDataset

 

Digital transformation can be difficult for any business, but in the financial services industry it can prove especially tricky. Replacing manual data processes is a big step, but in an industry so heavily regulated and audited, cohesive and comprehensive transformation is crucial.

Today, the challenge is no longer in convincing financial services organisations that they need to transform their processes and tasks; the vast majority understand the benefits of automating and streamlining their financial processes.

Instead, it’s about instilling the message that there is more to transformation than ripping out and replacing outdated technologies. A good financial transformation strategy must also take into account how these technologies are implemented, ensuring they integrate into an organisation’s culture, connect data and guarantee compliance, without completely demolishing the custom processes that employees want to use.

 

Little Fires Everywhere

While business transformation offers long-term benefits throughout an organisation, individual departments are often loathe to abandon the bespoke processes that facilitate day-to-day operations. Many organisations feel under pressure to transform quickly, and subsequently focus on how to get their employees onboard with a new solution rather than integrating every minute component of the old.

As a result, digital transformation efforts tend to bypass these disparate components, leaving small, potentially non-compliant hazards smouldering like little fires across an organisation.

These “little fires” don’t immediately represent a threat to business operations, but the lack of quality control, integration, and visibility of these manual workflows, means they’re inherently high-risk.

When a pressure situation hits the organisation, like a surprise audit, legal proceedings or new reporting demands, these processes become a highly combustible cocktail for non-compliance, lost data and human error.

 

Tackling the flames

Organisations need to tackle these little fires early on, rather than sitting back and hoping they will burn themselves out. But how can they be dealt with?

If you think of these small, unregistered processes as little fires, then your team needs to think like a firefighter — being fast, agile, flexible, and well-prepared for potential risks.

So how can CFOs, CXOs and Chief Transformation Officers bring this strategy to life?

 

  1. Be fast — don’t wait around for largescale digital transformation

There’s a common misconception amongst financial service organisations that before facing the issue, you need to wait until an overhaul of department processes or an in-depth audit. This could leave you waiting years for a solution that needs to be implemented in weeks, putting your department at risk.

Organisations must act with speed and address the issue head-on as soon as it has been spotted. Businesses don’t need to wait for largescale transformation; temporary or even permanent solutions do exist and can be tailored and installed immediately — targeting the issue before it becomes a bigger problem.

In my own business, we recommend a three 3-step approach to tackle these issue quickly: First, listening to an organisation’s business challenges to locate the most pressing fire. Second, build a working example for business leaders and decision-makers to evaluate. Finally, follow up with real-time collaboration to ensure that wider company processes don’t cause similar problems in future.

 

  1. Be agile and flexible — look for customisable solution that evolve over time

Organisations are ever-evolving, and so are the problems they face. However, some financial services organisations see the answer to these problems as a one-time, short-term fix. Working to put out these fires at speed shouldn’t stop organisations from considering how to prevent and deal with future ones. That’s why businesses run fire drills!

Financial organisations need forward-thinking systems that will work now and in the future, whenever they face their next data collaboration crisis. The ability to act in an agile way is fundamental to this sort of futureproofing.

Agile, flexible solutions will enable organisations to fight multiple fires, with the same systems, as time goes on. A one-size-fits-all approach won’t work here. Putting one fire to rest won’t prevent more from happening, and not all fires are the same (just try throwing water on a chip pan fire!) Every organisation has distinct needs and that means customised solutions.

 

  1. Be prepared — implement solutions before disruption occurs

To understand their weakness and subsequently prevent fires, financial service organisations must encourage employees across departments to hold an ethos of self-improvement. Preparation is key to success.

That means establishing a comprehensive understanding of the day-to-day routines of employees at all levels. It’s in habit and routine (one-off processes, keeping data on email, spreadsheets as systems, etc) where financial fire hazards thrive.

If new, more compliant technologies are to be installed, they cannot dismantle these existing routines. Flexible data collaboration solutions are needed that perfectly match the existing way of working. Achieving the goals of transformation without any of the disruption.

 

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