{"id":237425,"date":"2022-03-01T09:27:47","date_gmt":"2022-03-01T14:27:47","guid":{"rendered":"https:\/\/chiefexecutive.net\/?p=237425"},"modified":"2022-03-01T09:27:47","modified_gmt":"2022-03-01T14:27:47","slug":"leading-through-inflation-new-priorities-for-finance-and-the-cfo","status":"publish","type":"post","link":"https:\/\/chiefexecutive.net\/leading-through-inflation-new-priorities-for-finance-and-the-cfo\/","title":{"rendered":"Leading Through Inflation: New Priorities For Finance And The CFO"},"content":{"rendered":"

Part 6 of 11. See All ><\/a><\/p>\n

Editor\u2019s Note: March 24 Ram Charan and other experts will share a new, multi-disciplinary approach\u2014from communication to pricing to cost cutting\u2014to help your\u00a0management\u00a0team fight inflation and win.\u00a0<\/strong>Join us ><\/a><\/em><\/h5>\n

Cash is king in an inflationary environment, and finance is the keeper of cash. The CFO must understand clearly where the cash is going, ride close herd on receivables and take a proactive role in setting terms for customers. Developing online dashboards to monitor key financial metrics, especially cash on a daily basis, is essential.<\/p>\n

It is going to get increasingly difficult to collect receivables. In many companies, this function is delegated to small departments in finance, often staffed by low-level, low-paid employees. In an inflationary period, this is a ticking bomb because, as I said before, collection of receivables in a B2B business is critical\u2014it is the major cash trap for the company. The time is now for the CFO to build a strong department to manage receivables and working capital, led by a talented manager who reports directly to the CFO.<\/p>\n

For the CFO, it is also essential that they are communicating constantly, taking initiative to show, persuade and get everyone educated on inflation\u2014including the board\u2014especially how different rates of inflation in the sector may change the conditions of the company. This is the time when the CFO cannot communicate enough: What are the facts? What are the numbers? Where are we advancing, where are we stumbling? They should be measuring how well people throughout the organization\u2014and the board\u2014understand all of this.<\/p>\n

They\u2019ve got to lead the development of different scenarios, different remedies, what the options might be in different situations. Meanwhile, they also have to have a handle on daily cash inflow, report what\u2019s happening, manage the balance sheet, not incur too much debt. During a period of rising inflation, debt is a killer.<\/p>\n

People may tell you, \u201cWe have a low-priced debt, let\u2019s keep it.\u201d But ask yourself, \u201cWhat is my cash generation capacity in the inflationary period?\u201d If it\u2019s very good, keep the debt. Watch the payment schedule. But if your generation capacities are weakened, then you\u2019ve got a problem and you need to rethink what\u2019s on your books.<\/p>\n

Finally, the CFO has got to show how the business model needs to change. A few essentials:<\/p>\n