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THE EVOLVING ROLE OF THE CHIEF FINANCIAL OFFICER IN 2020

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Byline: Mohamed Chaudry, Group CFO of FoodHub

 

Traditionally, the role of the Chief Financial Officer (CFO) has been unambiguous. As the senior executive responsible for managing a company’s financial actions, the CFO tracks cash flow, provides financial analysis and planning, and takes evasive action when things aren’t looking quite right. It’s a role that hasn’t been around that long – the first companies began appointing CFOs in the mid-1960s. But until recently, little in the remit of the CFO had changed. As we’ve moved through the first two decades of the 21st century, however, CFOs have slowly begun to take on other duties, adopting responsibilities once the concern of other senior professionals. Now, with COVID-19 necessitating significant structural changes throughout the corporate ecosystem, and the shortening boom-bust cycle we’re experiencing,  what does it really mean to be a CFO? And what skills now lie at the core of the role?

 

How the Role of the CFO is Changing and Why

What is expected of today’s CFOs?

While financial acumen remains essential to the contemporary CFO, it is no longer enough for the successful fulfilment of the role. Real business perspicacity is required too. As is technical understanding – because as quickly as the CFO role is developing, technology is changing even faster. And it is impacting the very core of the CFOs responsibilities. While knowledge of banking and investment used to be enough to get by, anyone wishing to hold the role today also needs to understand the changing face of the payments industry. Not just cognisant of the fact that payment gateways and the like exist, but possessing a real understanding of how to identify the best for your company’s needs, how to implement those choices so that there is minimum disruption to your company and your customers. And that’s just the start.

 

Mohamed Chaudry

Technology and the CFO

In my role as Group Chief Financial Officer of FoodHub, tech plays as much of a role as financial ability. A simple example would be applying Sage ERP – an essential of the job that now requires an understanding of operating not just one entity, but multiple operations, multiple departments, multi-currencies, different jurisdictions and taxes – and how all of that impacts the platform on a technical and developmental level. Hacking and data protection are integral to every element of the process. A completely firm grasp of cloud technology and how it can assist the growth and reduce the overheads of a business is essential. And when dealing with developers, CFOs must understand what is being undertaken, its potential to impact the business, and the associated risks.

While many of these concerns would also fall within the remit of a CTO, the CFO must be involved in the processes in order to accomplish their objectives. This has led to a fluidity within the roles, where responsibilities are intermingled, and C-level roles somewhat merging.

It’s not just technical either, there’s a huge emphasis on operations too. In a high growth technology business I am involved in tackling operational problems relating to Human Resources, Marketing and Legal compliance.  The role is no longer just about simply monitoring, but becoming actively involved in, pushing for efficiencies and cost cutting.  FoodHub employs 800+ staff and my role also includes  monitoring staff and operational benchmarks as well as involvement in implementing new policies and procedures.

 

Why is the CFO changing?

The simple answer to that question is, ‘through necessity’. As discussed, technology, in particular, has influenced the CFO role. As it develops, it influences everything it touches. Operating models are becoming increasingly complex, stakeholders now have completely different requirements. But tech is not the only instigator of change. There are environmental factors too.

The global economic downturn of 2009 saw CFOs firefighting as the boom and bust cycle shortened. And it’s continued to shorten since. Prior to that time, the typical boom period was +10 years. Now, it is approximately 8 years and reducing. The runway is shorter, meaning that CFOs need to be as much about strategy as accounting. Planning for diversification in order to weather out the bust following a short burst of growth is as important as being able to take control of the company’s accounts. And at the moment, we’re working through another seismic event that will have its bearing on the role of the CFO – COVID-19.

 

How has Covid-19 impacted the role of a CFO?

Covid-19 has changed so many things. For the CFO it means stepping up another gear. Not just planning for stock control, but understanding whether the business can weather another lockdown, or further consecutive lockdowns. It means fully understanding your industry and making the decision about whether it’s possible to accelerate growth, or if it’s time for an inevitable slow down. It’s about searching for means of diversification, and forward planning to not just prepare for further Covid repercussions, but preparing for the next big scenario too, calculating what that might feasibly be, and how your business can survive.

At present, best estimates are that COVID-19 will impact businesses for 3 years or more. Company survival will depend very much upon the CFOs actions right now.

 

The future of the CFO?

Since its creation, the CFO’s role has always been integral to the success of a business. The changing expectations associated with the role now makes it even more important. But it begs the question of what the future of the role might be.  Based upon my experiences, I can only predict a further blending of the roles. The jury is still out as to whether C-level roles can or should be merged and the effectiveness of those changing roles in a fast paced SaaS business. However, one thing is certain, the skills needed in the roles do overlap and as successful CFOs, we need to adapt, learn, pivot with the changing world. Only that way can we hope to do the best for the companies in our care.

 

Business

THE ACCELERATION TOWARDS A MOBILE FIRST ECONOMY

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By Brad Hyett, CEO at phos

 

Over the last year, we have seen a big shift towards contactless payments. Fuelling this has of course been the coronavirus pandemic, which has made the public hesitant to handle cash due to the health concerns.

As multiple national lockdowns forced physical stores to close, and customers demanded easy, cash-free payment options, merchants had to quickly adapt. The result? An increased provision of pay and collect services.

In the UK alone, 83% of people use contactless payments according to data from the Office of National Statistics.

So it’s vital that merchants are equipped with the most efficient payment solutions, as the UK heads towards a mobile-first economy.

 

Proliferation of contactless payments

In 2020, 90% of UK card payments were contactless. This equates to an increase of 12% on the year prior, despite the total number of payments made falling by 11% from 2019 to 2020. Moreover, the affordability of smartphones has increased significantly over the last decade. And it’s estimated that 84% of UK adults now own one.

We’re Seeing merchants embrace more efficient and cost effective payment methods in response. While physical payment terminals are often too expensive for many small businesses, software point of sale, or SoftPoS, enables merchants to turn hardware that they already own – i.e. their mobile device – into a point of sale terminal.

With merchants increasingly adopting these innovative technologies, contactless payments will continue to gain popularity among the general public. In 2020, 13.7 million people in the UK either didn’t use cash at all or only used it to make a single purchase. That’s double the same figure from the previous year.

 

Changing consumer demand

Now more than ever, consumers are aware of how innovative payment solutions can add efficiency to their daily lives. As such, consumers now demand better payment services, including reduced queuing times, checkoutless stores, and bespoke loyalty schemes.

Businesses such as Mercedes offer an end-to-end digital car purchasing service, so customers can go through the whole car purchasing journey from the comfort of their own home. This includes car deliveries, financing, insurance and more.

Meanwhile, eCommerce giant Amazon has started trialling checkoutless ‘Go’ stores, speeding up the shopping experience by eliminating the queuing process altogether. The days of waiting for a table at a restaurant are also over, as more people have grown used to booking in advance.

Hence, it’s important that we empower small businesses to remain competitive and provide them with the payment solutions to meet customer demand.

 

Global transformations

The digital payments revolution isn’t slowing down anytime soon. By 2026, only 21 percent of transactions will be made using cash.

The US might have been slow out of the gate, but it’s starting to see increased adoption of mobile payments. In-store mobile payments grew by 29% in the States last year alone.

This growth was primarily fuelled by Gen Z-ers and millennials. Latest projections show that there will be 6 million new mobile wallet users by 2025, with millennials accounting for 4 million of this figure. These two generations, the former in particular, have grown up with mobile banking.

For most Gen Z-ers, their first foray into financial services was with a challenger bank like Starling or Monzo. These banks are able to offer online features such as ‘split the bill’, fee-free withdrawals abroad and much more to cater to the modern financial needs of the younger generation.

The Middle East experienced similarly sharp increases in contactless payments. From 2019 to 2020, there was a 200% growth in contactless transactions. This shift towards a mobile-first economy in the region was inevitable; the pandemic merely accelerated this shift. A recent study showed that 80% of people living in the Middle East planned to continue using contactless payments post-pandemic, with speed and security being the main draw.

 

The future is mobile

As parts of the world now start to come out of lockdown, there’s an openness to new solutions and a widespread acceptance of new technologies.

It is now a case of when, rather than if, we’ll see a permanent shift to cashless in the future. For businesses, embracing digital innovation will be key to remaining competitive and keeping pace with consumer demand in this fast-changing payments landscape.

 

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HOW MERCHANTS CAN IMPROVE THE ONLINE PAYMENTS EXPERIENCE

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By Alan Irwin, Senior Director of Product at Global Payments UK

 

The dramatic increase in online shopping over the past 18 months has encouraged many businesses to invest in developing their omnichannel shopping experiences. The reasons vary – some are keen to capitalise on the trend of older shoppers migrating towards ecommerce and some are trying to make up for loss of sales in brick-and-mortar stores during the pandemic. It is also true that many businesses are shifting their models to sell direct to consumers to avoid high marketplace fees and are therefore building their ecommerce channels for the first time.

The checkout experience is arguably the most important and delicate part of the ecommerce transaction, as it can make the difference between a happy customer likely to return, and a shopping cart abandoned out of frustration and confusion. A survey from March 2020 suggested that 88% of online shopping orders were abandoned, i.e. not converted into a purchase. A seamless, customer-centric online payment experience is therefore critically important in ensuring completed transactions. But with so many payment providers available, what should businesses be looking for when trying to keep friction to a minimum?

 

Keep clicks to a minimum

Less touchscreen interaction equals less abandonment. Adapting the payment page to fit any device and supporting popular mobile digital wallets like Google Pay ensures a seamless, stress- and hassle-free checkout experience for the customer and keeps clicks to a minimum. Friction can present itself in the most minor features – for example, when the customer is navigating the payment form, the appropriate keypad should be shown to the customer when required. It’s much easier to enter a card number using the dial pad instead of switching between QWERTY keypad layouts.

Simplifying online forms with autofill and tokenisation also significantly reduces friction at checkout and shortens necessary time taken. Ensuring checkout forms are tagged correctly for “autofill” is a great way to offer customers a single-click to input the payment, shipping, and billing data that they have stored in their browser profile. Similarly offering a guest checkout option will help convert customers who are in a hurry or looking for a one-off purchase. This can also be achieved by offering to store the payment details (called ‘tokenisation’) for express repeat and one-click purchases.

 

Make it easy to understand

A tailored payments approach can increase both domestic and international global sales. By offering a checkout experience in the customer’s language, the option to pay in their currency of choice, and use their preferred method of payment (whether it’s PayPal, Alipay or card), businesses can build loyalty quickly and put customers at ease. It is equally important for merchants to ensure they always display simple direction and information about next steps to instil confidence and prevent customer drop-off. The customer should be informed of what is happening at every stage in the process, for example, whether they will proceed to SCA (Secure Customer Authentication) next or go straight through to completion.

In addition, validating forms in real-time means merchants can highlight potential errors to the customer early on, and payment providers should provide this functionality. This could be an invalid expiry date, an incorrect digit in the card number or incorrect CVV number based on card type. When issues are only flagged at the end of the process, this forces the customer to go back through the steps to figure out the error. Real-time signposting of problems removes this potential friction and reduces the potential for a declined transaction.

 

Ensure seamless security

Merchants should work with a payment partner who offers the right blend of security and compliance management without it coming at a cost to the end-to-end checkout experience for the user. Instilling trust and security in your checkout flow while utilising the right solutions to drive seamless authentication flows will increase customer confidence and help prevent drop-off.

The greatest level of security and control comes from either utilising hosted payment fields that the
merchant can natively integrate into their checkout flow, or a hosted payment page where they can
manage the look and feel. Showcasing your brand on the checkout page with trust signals and logos also adds to building trust with the customer.

Staying ahead of regulations is also important. Secure Customer Authentication (SCA) will soon be mandatory in the UK for all eligible digital transactions, and this doesn’t have to be a friction-full process. Tools like Transaction Risk Analysis (TRA) and Exemption Optimisation Service (EOS) can quickly score transactions and drive exemptions where there is the right blend of transaction risk.

 

The devil is in the details

These three rules for successful ecommerce checkout experiences may seem straightforward, but it is important to apply them at a micro level. It can take only one minor point of friction to cause a customer to abandon their cart, and this will inevitably be replicated across other similar customers. It is critical to identify friction points early on and anticipate customer needs throughout the process. Discussing these points and any opportunities to improve customer checkout experience with your ecommerce team and payment provider is an important first step towards ensuring your entire shopping experience remains competitively seamless and loyalty is won. It may be that your payment provider cannot address them, in which case it could be time to move on in order to stay competitive.

 

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