The report, Finance Evolution, by KPMG’s CFO Advisory practice finds that while finance departments have played a pivotal role during the shutdown and are now looking to support new business strategies, they will be expected to lead by example on managing costs and rationalisation of operations.
The study shows that while CFOs are focusing on simplification of finance systems and increased automation and digitisation, already-stretched teams may lack the capacity to get full business benefits from new technologies while also fulfilling roles which have widened during the pandemic.
Sharp focus on costs has been combined in recent months with future-oriented activities such as scenario planning and increased management and board reporting, according to the survey.
Almost 40 per cent of finance leaders said they were not prepared for a transformed “headcount-lite” environment.
Peter Trace, partner, KPMG CFO Advisory practice, said CFOs and their teams have stood up well to the difficult challenges of the COVID crisis, but the short-term future does not look any easier.
“Finance leaders’ roles were already evolving before the global pandemic, but the crisis has accelerated the pace of this change with significantly more strategic responsibilities being taken on, while still covering all the BAU work,” Mr Trace said.
“Companies are now looking to finance teams to drive new initiatives to manage operating costs, and CFOs themselves are looking to lead the way through implementation of new finance technologies.
“Senior finance staff will need enhanced interpersonal and new digital and data analytical skills to optimise the benefits from these new technologies and to provide the broader business support required.
“It is not surprising, given all this, that most CFOs say one of their top priorities has been, and will remain, the health and wellbeing of their own staff. Finance leaders have been required to divert more time and energy onto team engagement and check-in activities than ever before and they acknowledge that managing the mental health of their teams will continue to require much of their attention.”
The report found that the COVID crisis has accelerated underlying trends that were emerging in finance and has revealed several growing challenges facing finance teams.
The more strategic and forward-looking role played during the pandemic is expected to continue, including modelling future risks and opportunities to support decisions coming out of the crisis, yet nearly one-quarter (23 per cent) do not feel prepared for this.
Business partnering is highly valued and requires increased EQ and communication skills in finance teams, but just 16 per cent of those surveyed feel very prepared and have the right skills in place.
Almost 80 per cent of CFOs agree that finance operations are moving to be “asset-lite” through the adoption of new technology, digitisation and cloud-based solutions. But preparedness varies — almost 20 per cent of respondents are not ready for this move and only 16 per cent are “very prepared”.
The report stated that during the crisis, the key initial task of finance was to support staff to work remotely while protecting cash flow and funding.
To meet these challenges, finance’s role and responsibilities began to extend far beyond their company’s financial matters to focus on strategic support, risk mitigation and resilience across all facets of the business.
According to the survey, as the crisis unfolded, finance leaders’ focus was more on cost reduction and cash management across the business but with a responsibility to provide more forward-oriented insights and analysis for internal decision support and external reporting.
“As we have moved through the crisis and as finance leaders look forward, there is widespread acceptance that the broader and pivotal role of finance will continue,” Mr Trace added.
“Ensuring tight fiscal management is accompanied by responsibility for assessing the impact of risks and opportunities on business strategy, driving M&A activity and finding ways to increase business efficiency and support business growth.
“But nearly a quarter of finance leaders do not currently feel ready to perform these roles on an ongoing basis, and this is largely due to concerns over having the right technology and tools in place, with many still working with legacy systems.
“Finance teams have played a critical role throughout the crisis and this will continue. But the demands on finance leaders and their teams are not reducing; therefore, unless something changes — whether that be by managing stakeholder expectations, adjusting resource models or investing in new technologies to improve productivity — managing the health and wellbeing of finance teams will be increasingly challenging.”