Carol Lee, CFO of Wrike
There is no denying that the finance function plays an important role in every aspect of ‘doing business’. Although much of ensuring strong financial health, tracking revenue, and managing budgets will take place behind the scenes, all are key ingredients which, ultimately, determine whether a business is successful. This is even more relevant in today’s climate.
Thanks to the ongoing pandemic and resulting economic flux, each and every business has faced financial challenges in recent months. As revenues continue to falter, budgets are tighter than ever and profitability is essential.
Amid the economic uncertainty, CFOs and finance teams are set to play an important role in recovery efforts moving forward. Ensuring financial wealth and a solid revenue stream has never been more important. For many, it has also never been more difficult to achieve.
Real-time finance
The modern finance team needs to be about far more than month-end and retrospective quarterly reporting. The pandemic has highlighted how important this statement is, with sudden shifts in consumer demand for certain products and services driving drastic changes in revenue for many businesses. For example, at the beginning of the pandemic, many supermarkets will have seen their revenues increase, whilst restaurants and gyms witnessed significant dips following necessary closures.
In order to survive this time of turmoil, finance teams need to be able to quickly and efficiently adapt to these changes in customer behaviour. Planning projects that are expected to yield profit is no longer enough. Finance teams need to ensure that these projects maintain profitability throughout their lifecycle, controlling financials from the planning phase through client delivery. As such, tracking budget spend in real-time in order to keep margins positive and meet customer expectations is key.
Visibility needs to be front of mind, especially in our new remote working landscape, where face-to-face communications has had to take a backseat. The right performance metrics, delivered on time, can enable finance teams to track and obtain a deeper understanding of how projects and finance strategies are progressing and delivering against set objectives. They can help to determine stress points in the business and articulate events and triggers for certain financial actions to be taken.
When utilised alongside the right modern technologies, they can even help to save projects that aren’t delivering, flagging potential problems and recommending where adjustments should be made.
Predicting and mitigating risk
Whether it’s unforeseen additional costs, tight margins, or budget burn, these are the factors that can make or break the success of a project and, ultimately, a business. By using real-time insights, finance teams can play a pivotal role in keeping the entire organisation on track. In order to take this one step further and mitigate any potential risks before they wreak havoc, finance teams need to be able to predict and plan for a series of different outcomes. This is where modern technologies, such as artificial intelligence (AI) and machine learning (ML) can help.
Tools with these technologies can help finance teams to get one step ahead and tackle at-risk projects before they cause any issues. By identifying signals and patterns based on hundreds of factors – including past campaign results, work progress, organisation history and work complexity – they provide extremely timely diagnosis and help to minimise risk throughout the entire organisation. For each project, an automated risk assessment prediction will be issued. For both medium and high risk levels, the machine learning model will also provide a list of factors that could contribute to potential delays. The insights that these reports provide can help to save entire projects.
Once a finance team knows what the potential risk might be, they can turn their attention towards what is truly important – managing and mitigating it. This can be done by assessing a project’s ‘risk tolerance’. Put simply, how much risk can you allow before you need to act. This is an essential part of any project management process, helping finance professionals to decide on the most effective response and ensuring that resources are being used in the most effective way.
As organisations across every sector fight to get back on their feet post-pandemic, ensuring long-term profitability will be a key focus. Many businesses will turn to their finance teams to lead the charge and provide the solutions and recommendations which will ensure future economic survival. As such, having a plan in place to make sure that all projects stay on track and that any potential risks to the business are mitigated before they cause a problem needs to be a priority. By investing in modern technologies – such as AI and ML – today, finance teams are setting themselves up for success tomorrow, no matter what is around the corner.
