What Does Your CFO Care About and Why Should you Care?

Posted by Kelley Lear on Feb 22, 2012 | 0 comments

What Does Your CFO Care About and Why Should you Care?

Every year, I take an in-depth look at what the CFO’s are saying and predicting for the coming year.  Last year I shared my findings with you.  I thought I would do that again, as this is a pretty important thing to understand.  But, why should you care?  Well, in most cases the tax department must rely on approval from the CFO for tax department budgets, operational decisions, and other strategic initiatives.  Therefore, I believe it is critical to better understand what they are hoping for, struggling with and trying to overcome each year.  It can only help you when putting together a business case or trying to prioritize tax department projects, as you may be able to better align with overall CFO and other corporate initiatives.  Big fan of doing your homework!

Deloitte conducts many exceptional surveys throughout the year.  The CFO survey I keep up on is offered quarterly.  This CFO survey for the last quarter coming into 2012 is titled “CFO Signals™ What North America’s top finance executives are thinking – and doing”.

Expectations, Risks and Challenges:

  • The highest impact risk they are worried about from an economic perspective is the Euro zone and global economic turmoil.  This is followed up closely by government policy decisions and the lack of available capital.
  • The top three economic challenges they believe they had for their individual companies were social policy, spending and environmental policy.
  • The top three industry challenges were pricing trends and industry regulation and/or legislation (which have risen significantly over last year).
  • Top company specific business challenges they are concerned with are existing market revenue growth, framing and/or adopting strategy, and prioritizing investments (39% up from 18% last year).
  • They believe their Boards are most focused on “strategic risk”, “compliance risk” and “financial risk”.
  • CFO’s believe that their top three challenges within the finance organization at their companies are “providing metrics/info/tools for business decisions and influencing business strategies and operational priorities”.
  • Their top three overall job stresses are “change initiatives” (which include M&A, systems changes and IPO’s), “changing regulatory requirements” and “strategic ambiguity”.  Similar to tax, they are also facing stress related to lack of staff and the need for training…in their case, better analytical, financial and macroeconomic skill sets in the folks they do have.
  • CFO expectations are still somewhat positive; however they are lower than in the first half of 2011.
  • Other notable finding…Corporate Tax Policy is also a top concern for CFO’s this year.

So, what does this mean for tax departments?  My guess is the following:

  1. CFO’s are going to be even more careful this year in terms of prioritizing and funding projects. They are not negative, but are feeling considerably conservative!
  2. Business cases will need to align with corporate strategy.
  3. Business cases to obtain revenue or implement new solutions should focus on qualifying/quantifying risk mitigation, dealing with changing regulation and reducing overall compliance risk.  Cost reduction only is NOT the major focus this year and should be secondary to benefits noted.
  4. Initiatives which focus on training, analytics and staff efficiency/effectiveness may be well positioned this year.  CFO’s will be able to relate.
  5. Well thought out implementation plans and ongoing transparency and ROI will help you to gain CFO favor and project funding in the future.  Providing supporting metrics for projects and other analytics will also assist the CFO in reporting back to the CEO and the Board.

Just a few of my thoughts?  Anything that comes to mind for you as you read the summary and/or the report?  What are you focusing on this year?

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