4 Ways CFOs Can Do More With Less

4 Ways CFOs Can Do More With Less

As many CFOs still look to grow in 2023, those who proactively cut spending where possible have a competitive edge.

Organizational budgets, regardless of industry, are tightening. Accounting for the Fed proving itself to be resilient to hit 2% inflation, the troubles in the banking systems, and ChatGPT’s disruption, CFOs are operating in a highly volatile environment. Many of the world’s largest companies have begun layoffs, implemented budget cuts, and reduced allocations across the board.

Despite nearly three-quarters of CFOs saying they embrace double-digit spending increases this year in order to grow, many may be reconsidering their initiatives, as things outside of their control impede their efforts. Dean Quiambao, partner at accounting and consulting firm Armanino, suggests doing more with less is not just a way to save during hard times, but a trend that will reshape the way organizations and leadership approach corporate spending and operations.

To leverage this trend, finance leaders must be prepared to trim wherever possible. Below are four ways finance executives can continue growth trajectories in down markets with fewer resources.

Communicate what you are doing as a management team to extend runway or increase liquidity. — Dean Quiambao, Armanino

1. Prioritize Internal Communication

Strong communication can make the difference between a functional and proactive executive.  In times of struggle, suggested Quiambao, executives who prioritize internal communication from the beginning can make for the easiest transition for those impacted by spending cuts. “Communicating with vendors, creditors, and lenders is critical,” said Quiambao. “Communicate thoughtfully and get their buy-in.”

While good communication has proven valuable for smaller companies dealing with the troubles induced by the Silicon Valley Bank collapse, good communication in less hectic moments still pays major dividends for those looking to be transparent from the get-go. “Communicate what you are doing as a management team to extend runway or increase liquidity,” said the consulting leader.

2. Take a Strategic, Short-Term Approach

According to Quiambao, in a leaner market, the value of accurate, short-term cash flow analysis and prediction approaches and tools is increased. “Create a 13-week cash model, inflows and outflows per day,” he suggests. Although this needs to be inclusive of all disbursements, credit cards, and payroll, the ability to accurately assess and predict through data can still provide short-term dividends. “Assess your balance sheet for quick wins that could help liquidity,” said Quiambao.

3. Listen and Ask for Help

Whether it’s through media, attendance of events, calling on colleagues and past partners, or conferring with fellow leadership, CFOs looking to hold themselves and their companies to the same standards while trimming budgets must be “all-ears” in their approach. While top CFOs have recently reinforced the value of upskilling and continued efforts to learn, Quiambao suggests these initiatives by leadership separate ideal outcomes from those outcomes that are not.

“Reach out to advisers, listen to lots of viewpoints, and then take action,” said Quiambao. “Too many times, we see companies do things slowly, trying to be careful, but the result is things like multiple rounds of layoffs [or] other things that don’t work out well.”

Any company with cash in a bank or invested should have an investment policy that outlines how its cash is put to work and the parameters around that. — Quiambao

Proactive decision-making, according to Quiambao, is always better than waiting and reacting. “Better to make a decision and then work like hell to make it turn out to be the best decision versus waiting forever for all the data to come in to try to make the ‘best’ decision but too late,” he said.

4. Update Policies

Through things like diversifying bank accounts or changing approaches to how the organization invests its excess cash, leadership must give themselves the ability to adapt to an ever-changing economic landscape. By operating under confines or rules established in the past, some of which came from people no longer with the company, executives can encounter roadblocks when making proactive decisions.

“Any company with cash in a bank or invested should have an investment policy that outlines how its cash is put to work and the parameters around that,” Quiambao said.

By Adam Zaki – March 27, 2023- CFO.com