What's the future of finance, and how can finance leaders prepare for a successful 2023?
That was the topic on the table during our recent CFO Leadership Live panel discussion in Dallas, and our expert guests — Stacy Repult, CFO of FlexXray and Russell Bowman, Senior VP of Finance at PICKUP — dove right in, sharing their insights on everything from where the economy is headed and how to secure the all-important talent leaders will need if they want to thrive in the new year and in the future.
If you couldn't join us for our quarterly finance leadership lunch and learn, here's what you missed:
During budget planning and strategy, the importance of resource alignment and deep organizational knowledge cannot be overstated
As we head into 2023, leaders should prepare for three major challenges: an unpredictable economy, rising interest rates and a competitive labor market
With a lean talent pool and workforce with post-pandemic priorities, reimagining company culture with an assist from technology will give finance leaders the edge
When deciding what technological investments to make, leaders should zoom out before they get lost in the weeds, and think beyond RPA
To manage risk in a volatile economy, strategic goals should be clear, innovation must be collaborative and lean optimization can help win the day
Preparing for the future of finance will require empowering teams to play to their strengths and rise creatively to the challenges ahead
Deep Organizational Knowledge Will Keep Next Year's Budgets Strategically Aligned
Our panelists agreed on one thing straightaway. No one loves budget planning season. But with the right mindset and approach, finance leaders can keep dread and resentment at bay by cultivating a deep understanding of the business, their colleagues and the needs of each.
"You need to know the business — intimately. [Know it] as well as your owners, as well as the CEO, as well as your board," Russell Bowman, Senior VP of Finance at Plano-based freight and last-mile package transportation startup PICKUP, advised. "Gone are the days where accounting and finance is just going to roll up a bunch of numbers and present them. The board is going to ask you questions about the assumptions you made, and that’s especially true when there’s ambiguity and risk, which there has been for the last year.”
For Stacy Repult, the CFO of FlexXray — a food safety inspection and recovery service headquartered in Arlington — that means using budget planning as a resource alignment and strategic planning exercise. “The planning season, for me, is an opportunity to step through the milestone, step through the game plan, step through the strategy, and how we're aligning with where we think we're heading," she said.
It's also a time to go back to basics and ask key questions. Repult says she starts with a top-down approach that gets more focused as she works through the process with her team. "What are we focusing on? What are we not focusing on? Where are we spending the money, and what are we investing in? What are we cutting?" Repult anticipates the questions she'll be asked and then works to validate the answers to them by answering them ahead of time and being transparent at every point in the process.
By putting it all out on the table and reaching the answers as a unit, the budget emerges; the strategic result of stepping through each department's needs and aligning the appropriate resources to them.
Challenges Await in the Year to Come — While Leaders Work to Tackle Last Year's Biggest Headache
When host Megan Weis asked what challenges were on the minds of CFOs and other senior finance leaders with the end of Q4 looming, our panelists named three major pain points: uncertain economic conditions, rising interest rates and inflation and stubborn talent and labor woes.
For Repult, labor came to mind as 2023's biggest and toughest nut to crack: “The labor pool is not getting better anytime soon," she warned. "This is it. We're in it. We’ve got to figure out a way to be innovative to get labor interested in being part of the team and staying on board… [finance leaders have] got to have a different way of looking at our labor pools."
From reworking the benefits structure FlexXray provides to meeting an increased demand for flexibility in a post-pandemic workforce, Repult's plans for next year include rising to the challenge of "reinventing" the organization's approach to hiring.
She predicts that doing that will mean getting creative, and Bowman agreed, adding that investing in talent solutions needs to be a part of the budgeting process. "In today's market, the war for talent is just crazy. It's just one of the things that we've had to do — double down when it comes time to do the budget and focus on how we want to invest in people. Talent acquisition, retention and productivity has to be a part of the budgeting process especially with these many variables up in the air."
Technology Investments Are No Longer 'Nice to Have' — They're Necessities
While investing and implementing technology has been an urgent to-do for finance leaders, Bowman stresses the importance of making this year the year to get it done, noting from experience that it "goes straight to the bottom line." It may help to see acting on stagnating tech improvements as the tool that will facilitate crushing the rest of the long list of action items leaders have to contend with. That's been Bowman's experience, so far, and he can draw a straight line from the implementation of an updated tech stack to the delivery of six percentage points over gross margins, representing millions. "That's huge," he says, "Because the software — the automation — will deliver that every single month."
Bowman also has a forward-facing initiative planned, hoping to improve the overall experience for PICKUP's customers with an app rollout that addresses a major pain point in last mile delivery — and one that CFO Leadership Live attendees commiserated with collective good humor at Bowman's summary of the problem they hoped to solve, drawing laughter:
"It's one of the most frustrating things [for customers]. You buy something big and it's 'Hey, can you be home all day long? How about a short six-hour window, then?' It's like, 'No!' We’re working on software with the goal of telling them ‘We can deliver to you at 10:00 AM, and we’ll be there within five minutes either way.”
Bowman clarified that, "We’re not reinventing any technology, we’re just prioritizing it. We hired a product team to create a moat around the tech team. So, the tech team can just sit down and code and deliver and that is helping tremendously."
As for the tech investments FlexXray plans on making with Repult leading the charge, "We are looking at everything," she told Weis. "Order-to-cash, EDI and even plugging into our customers' inventory management." Of course, Repult recognizes that 'everything' represents a not-insignificant project in terms of scope and logistics, advising other leaders considering a similar overhaul that it will require a strategic, stepped-through approach. To achieve that, she plans to "go back through the overhead exercise and start plugging and playing … we're going to put together a phased rollout, a kind of roadmap for tech and enablement."
Catching finance up when it comes to the technology available to streamline processes and deliver current, clean data should be a top priority for senior leadership— it's one of the responsibilities of holding an executive position in the finance function, especially as a CFO.
"You're really there to enable data-driven decisions and you have to be the catalyst to have people think thoughtfully with data behind it, supporting their decisions because people are going to have a gut [instinct], but if you can't support it with data, or you can't identify why they're wrong, you're not helping."
Being Recession Ready Will Require a Strategy that Touches Every Part of the Organization
With inflation on the rise, economic conditions that are starting to rhyme with 2008, and interest rates that keep climbing, finance leaders are wary and starting to prepare themselves, their organizations and their teams for the possibility of a recession in the future.
To understand how our panelists were approaching that possibility and readying themselves to navigate a potentially turbulent 2023, Weis asked our panelists to relay their experience and apply their expertise to this thorny issue. They delivered a range of actionable advice for finance leaders.
For Bowman, an ounce of preparation is worth far more than any remedy. "I can’t stress enough the importance of being a lean organization," he urged. "If you haven’t done that, you can drive that from the finance function. There are some affordable lean Six Sigma certifications out there, and the principles are great," going on to stress that it's not enough to universalize and document processes — efficiency, improvement and optimization are a must.
Circling back to his guiding principle of relationship-building, he advised the panel to ensure those relationships include suppliers and vendors as well as customers — and that they be given the same individualized treatment and care. For instance, he said, in industries affected by supply chain challenges, without those genuine one-on-one relationships, you risk getting lost in the swell of demand from the entire client roll. “Make sure during this period you know your suppliers as well as you know your customers. You have to have those relationships in place, so that when you’re calling your supplier, asking for a favor, they’re willing to do it.”
Operationally, Repult opined that it was likely too late to start hedging at this point in the game and advises leaders to rethink continuous planning and rolling forecasting by shortening the cadence dramatically. “When you roll, roll at the one-month line or at the three-month line — you [might] save 80 basis points and that matters — it adds up.”
She urged leaders to think from a place that's much more strategic than simply checking a box: "In finance, sometimes with cash management you think about schedule and rhythm and it becomes almost about convenience but it really needs to be about the money. To do that one month roll? It’s a headache, yes, but it’s saving money and it’s worth it. If you don’t think on that basis, you’ll miss those opportunities.”
Enabling Growth and Managing Risk in Tandem is a Matter of the Adopting the Right Mindset - The Future of Finance
In 2023, finance leaders will have to grapple with how to keep from stagnating with sustained and strategic growth in an environment that's less friendly than it was even a year ago. That's not without risk, and so it will fall to the finance function — and senior leadership in particular — to balance the two.
Repult agreed that finance leaders will face lots of hurdles along the way, and expanded on the importance of forging relationships in the boardroom and beyond, but especially with other C-Suite leaders. "It’s a mindset thing," She acknowledged. "We’ve got to be the thought partner at the table and be creative to really over the team and make sure you have the relationships and camaraderie with your peers — the CEO, the COO the CSO — you’ve got to be part of the creative team." Differing approaches and perspectives are inevitable, she advised, but there's no need to flinch away from disagreements when you've established the relationships that can withstand them.
"When you do disagree, voice it, but be able to back it up — be able to explain why you have an issue with something. Don’t feel like you have to control it for the sake of controlling it. If you don’t have a reason, you need to think about that. Know why you’re doing what you’re doing and be able to own that. That goes into cash management."
Bowman enthusiastically endorses this approach, as well. "It’s about pulling everybody together — getting everyone to understand that we’re all in this thing together," he agreed, stressing that "It’s not about departments working together," explaining that it has to be bigger than that, citing a recent experience of his own early on in his role at PICKUP.
“We had very clear, strategic objectives. So, senior leadership got together and we talked about the goal for the year. Not at the department level, but at the top level. We all want this. We want to grow. How do we get there?”
The result, he said, were solutions that emerged in an atmosphere of collaborative problem-solving that centered the needs of the organization above all. "Multiple department managers [were] coming together and saying, 'You know, we’ve been thinking about if we change how we all work together, we can get rid of a couple of tools that we don’t need and all use one tool.' And all of a sudden we can make a cost segment through the company, all of us together.”
To Prepare for an Uncertain Finance Future, Investing in the Right People is a Gamechanger
A common thread that ran through this quarter's CFO Leadership Live event in Dallas was the importance of people and relationships, and as Weis wrapped the discussion with a final question about what finance leaders — and the future of the finance function as a whole — can do now to prepare for whatever is around the corner after the year's books have been closed, the theme emerged again.
For Repult, the most valuable tool at her disposal for rising to meet 2023's challenges are the people on her team, especially given FlexXray's plan for the new year.
“2023 is going to be a huge growth year for us in the middle of a lot of external pressures with the economy. So I want everybody on my team playing hard to their strengths and feeling empowered to do that. I don’t want to be the bottleneck for the finance team. I’ve got a controller. I’ve got a head of FP&A. I want them to have direct access and to be able to be leaning on their own departments. That way we have a team that’s working on all cylinders.”
For his part, Bowman feels ready to tackle whatever 2023 can throw at him and credits the strong senior leadership at PICKUP for the organization's preparedness. “It’s about building resilience, emotional intelligence and letting each other be human while also holding each other accountable. I love being able to sit at the table with a bunch of senior leaders and sit around, talk about the to-do plans and the tasks and knowing that when we’re walking out of that room, everyone is going to deliver.”
Whatever 2023 has in store for the economy and what impact that will have on the talent market, one thing we can say with certainty is that it won't be dull. Finance leaders are uniquely positioned to steward businesses through the change it brings, and by preparing for success in the future, they can confidently steer toward calmer waters and brighter horizons. Are you ready?
Interested in attending our next event? Check our calendar to see where we're headed next quarter. In the meantime, browse our helpful resources for finance professionals looking to prepare for the future, including even more thought leadership from finance experts with our award-winning CFO Weekly Podcast, also hosted by the moderator of CFO Leadership Live panel discussions, Megan Weis — VP & General Manager of FAO Services at Personiv.