Cash Flow, Working Capital Capabilities Among Priorities of CFOs Around the Globe

Chief financial officers and financial executives across the globe will continue to focus on addressing their cash flow and working capital capabilities in 2015, according to the annual Finance Priorities Survey released by Protiviti and Financial Executives Research Foundation.

Given the increased imperative to mitigate the effects of economic volatility, finance executives are placing more emphasis on financial close management and visibility around their cash horizons through strategic planning, forecasting, risk management and business intelligence, along with better transparency into performance overall.

With the sheer number of finance priorities ranked as “significant” at an all-time high in the four-year history of the survey, the results reveal a focus by CFOs on getting back to finance basics in 2015.

Finance executives have also shifted their priorities towards attracting and retaining talent with strong ‘people’ skills, as well as the technical knowledge and analytical expertise to manage an evolving set of changes in the areas of regulation, domestic tax law, accounting standards and financial data analysis.

The top priorities in the survey's Process Capabilities for Financial Transactions category demonstrate a continued desire to holistically manage and enhance fundamental financial operations, while also maintaining a focus on revenue-generating activities.

This focus has increased year-over-year as more organizations step up their vigilance in guarding against lapses that, during periods of heavy business activity, can slip into transactional processes – such as account reconciliations, payroll processes, accounts receivable and invoicing/billing.

Specifically, respondents have prioritized the following functions:

  • Period-end close
  • Cash forecasting
  • Account reconciliations
  • Working capital management
  • Accounts receivable

“ERP, general ledger and consolidation systems have dramatically reduced human errors and processing delays, but the processes of reconciling and closing a company’s books at local and group levels continue to burden the finance function,” explained Bill Sinnett, senior director of research, Financial Executives Research Foundation.

Within the survey’s Process Capabilities for Financial Analysis category, several areas of focus continue to reflect the finance function's commitment to sharing clear insights on performance, cash positions and profitability in real-time.

According to respondents, top priorities to address in the coming year include:

  • Strategic planning
  • Budgeting
  • Periodic forecasting
  • Profitability analysis (product, customer, channel, etc.)
  • Risk management (assessing risks tied to strategy, forecasting, etc.)

"Amid a changing operating environment, companies are now placing an increased emphasis on the holistic alignment of their strategy, risk management capabilities and performance management processes," said Ryan Senter, a managing director with Protiviti’s Business Performance Improvement practice. "Rather than applying patchwork fixes to individual processes, finance functions want to manage and improve related processes in a comprehensive manner to ultimately improve overall corporate performance management."

“Additionally, CFOs and finance executives continue to worry about which core finance business processes will be required in-house versus those that can be performed better and more cost effectively by others, as well as how finance organizations should be optimized and their talent aligned to support new service strategies,” said Peter Firestone, also a managing director with Protiviti’s Business Performance Improvement practice. “Our survey results reinforce the continued challenge for CFOs: how to make finance a strategic partner to the business to enable profitable growth, whether it’s through strategic acquisitions or market expansion.”

When ranking priorities in the Emerging Issues category, financial executives selected issues that pose new risks, challenges and opportunities for finance functions. These included:

  • Sustainability
  • Changes to U.S. healthcare regulations
  • Revenue recognition (impending new accounting standard)
  • Globalization
  • Workforce mobility

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