Many small- and medium-sized businesses continue to navigate through incredibly turbulent waters. After enduring multiple COVID-19 spikes over the last 18 months, what challenges will these businesses encounter in the new year? What actions should their CFOs be taking in 2022?
While some organizations have enjoyed growth, many others have stagnated or shrunk. Now, with the omicron variant spreading, business confidence has taken another hit.
CFOs must support their CEOs and cross-functional partners in driving business recovery and addressing the continued uncertainty. As CFOs, we are uniquely positioned to see the bigger picture, understand the ins and outs of our companies, and map the best paths to success.
Providing accurate reporting and insightful data, monitoring and managing cash flow, and developing strategic plans for growth (with contingency plans for setbacks) has never been more critical. Now is also the time to revisit organizational and cost structures, identifying opportunities to streamline, cut costs, and protect the business.
During the pandemic, we had no choice but to allow remote and hybrid work to become a way of life. Since then, views on working environments have evolved. Now, we realize employees can be very productive at home. However, with remote work arrangements, the days of impromptu meetings at the water cooler are gone. To enable a team’s success, we must rethink how we onboard new hires, build camaraderie, and give the team visibility into the organization.
New team members will need to be self-starters or able to work independently. They must also have the courage to speak up when they need assistance and be comfortable communicating across the company and with all levels of leadership.
Consider using team assignments to facilitate relationship-building and collaboration among co-workers. Likewise, consider appointing a team to cross-functional projects to expose them to fellow employees and help them learn more about the company.
Marketing a company as sustainable and conscientious of environmental, social, and governance (ESG) issues — and meaning it — can lead to concrete financial benefits. But ESG issues must be effectively managed to avoid negatively impacting the company’s performance and reputation.
A CFO should take an active role in developing their company’s ESG strategy, even when it’s not officially their responsibility. Consider sustainability in making investment decisions; for example, prioritizing new equipment that increases capacity while reducing energy requirements or scrap losses. Finally, learn about ESG reporting best practices and monitor discussions that could lead to formal ESG reporting requirements.
CEOs and boards of directors increasingly hold the CFO accountable for enterprise risk management. Creating and maintaining an effective system of internal controls, though, is not the point. Identifying and managing risk is not the point either. Rather, ERM is all about defining the organization’s strategic goals and objectives, doing whatever it takes to achieve them, and identifying potential roadblocks or barriers to success and then overcoming them (with risk mitigation plans.). While you can’t predict a specific disaster like a pandemic, you can undoubtedly build business continuity, disaster recovery, and remote work plans.
DE&I is becoming more of a competitive differentiator, in addition to being the right thing to do. Companies that embrace diversity benefit in many ways. Based on the findings of a recent study by IMA (Institute of Management Accountants) and the California Society of Certified Public Accountants (CalCPA), however, there is a significant diversity gap within accounting. This year, build your awareness and invest in meaningful DE&I training for the finance team. When recruiting, require diversity in the candidate pool, and mentor new hires during their onboarding and beyond. Most importantly, facilitate engagement, ensuring all voices are represented and heard.
Automation of finance will accelerate. The focus used to be on automating repetitive tasks. Now we’re seeing “bots” programmed with artificial intelligence and machine learning complete the quarterly forecast better than a whole team of degreed and credentialed professionals. CFOs must continue to invest in the future, build their talent pipeline, and invest in technology, seeking to learn more about these tools.
There will be greater demand for upskilling in 2022. In a smaller business, the CFO has always worn many hats. But technology is moving quickly, and the finance team’s responsibilities are expanding daily. To survive and thrive, adopt a “growth learning” mindset. Personally commit to learning about strategic planning best practices, industry trends, and the topics above. Likewise, provide the finance team the opportunity to upgrade their skills and knowledge. To ensure learning occurs, set aside budget and time for employee development and hold the employee responsible for taking advantage of it.
Steve McNally, CMA, CPA, is chair of the Institute of Management Accountants and CFO of The PTI (Plastic Technologies Inc.) Group of companies.