Advice and Information for Finance Professionals

How to Move Forward with Finance Planning in a Post-Brexit World

Guest Author

by Laurent Dechaux, Vice President, Digital Finance, Oracle @LaurentDechaux 

For the CFO who favours a quiet life, the economic uncertainty and political change that have defined 2016 have certainly disrupted the peace. Finance leaders were already under considerable pressure to modernize business processes and help their organization stay ahead of disruptive competitors, and June’s EU referendum vote has only made their jobs more complicated.

The Brexit vote caught many businesses on the back foot. Our latest research report, Stepping into the Unknown, reveals 41% of businesses did not expect a “leave” result and are now playing catch-up.

But uncertainty does not stop opportunity. In fact, it is the ideal proving ground for strategic movers. Some of today’s most successful companies launched in the wake of the 2008 financial crisis, jumping on changes in consumer habits and implementing processes that were agile enough to adapt as they grew. For those CFOs who have been waiting for the right moment to prove their strategic value to the business, this is very much their time.

In Uncertain Times, Doing Nothing is Not an Option

50% of finance leaders expect to see more companies struggling and going bust in the next year as a result of economic uncertainty and market change. Of course this also increases the likelihood of businesses seeking a sale or becoming targets for a takeover, and 59% of respondents therefore expect to see more mergers and acquisitions in the coming year.

In this volatile market environment, standing still is the equivalent of moving backwards. Finance leaders understand they cannot be caught in the headlights while competitors continue to chase disruption and expansion. 46% of finance leaders plan to invest in growth if there is a strong business case, even if they are being more cautious.

This is compared with 32% who admit they are cutting spending to the bare essentials. While this might feel prudent, it is a short-term solution. It will be near-impossible for the overly cautious to keep pace with more steadfast competitors if they wait for the dust to settle on current uncertainty. Even those businesses with a more cautious outlook understand this and will strive to quickly assess their options before chasing growth, albeit more strategically.

Download the Full Results of Our Post-Brexit Survey of 800 European Finance Leaders

Strategic investment and sound decision-making have never been more crucial. Choices made in the coming year may have make-or-break implications, which is why companies are relying more heavily on the steady hand of the CFO to guide them.

Finance leaders have too often been portrayed as the people tasked with reining in cost at every opportunity, but in an uncertain economy their role is more nuanced. They must remain mindful of spending but at the same time keep the company from adopting too severe an austerity footing.

There are undoubtedly challenges in the way, both present and unknown. Nearly half (46%) of finance leaders say their forward planning has become more complex and uncertain. In response, 44% have developed multiple contingency plans which need to be updated regularly to ensure the business stays on top of change and is ready to react under any conditions.

Finance leaders are feeling the pressure, but they are also taking ownership of their more strategic role and leading on the business’ planning and modelling. More than half (52%) say their job now largely involves advising the business on how it can achieve growth goals, and a similar percentage admit it has become more focused on forward planning.

The most successful finance leaders thrive when faced with strategic challenges, so it’s hardly surprising that 53% say their insights have never been more valuable to the business and that the same proportion finds their job more rewarding as a result.

Priming the Business for Change

The events of 2016 have no doubt shocked many businesses into reassessing their strategies and outlook, but there is more uncertainty to come. We live in a time where change has become the new norm. Whether an organization faces major political change or sudden swings in the economy, it must be quick to adapt.

This takes more than transformational processes and technologies. It requires a cultural shift that begins at the top with strong leadership and trickles down to every member of the workforce.

Finance professionals can bring their experience to bear on smarter planning and more agile risk assessment, and in doing so cement their role as true business leaders.

In the years since the 2008 financial crisis, CFOs have established themselves as a go-to resource for key strategic insight. Now comes the first major test of their expanded skill set, and nobody is better placed to step up to the challenge.

Learn more from our post-Brexit survey, "Stepping Into the Unknown."

This article was originally published on the Oracle UK web site.

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