10 questions CFOs have to consider.
(This is a modification of a 2009 McKinsey Article: What Next? Ten Questions for CFOs)
1) How is my company prepared for a worsening Euro crises?
In a recent interview in the Economia magazine the RBS Chairman when asked how worried we should be about the euro, he replied “Terrified”.
2) Is our cash position adequate?
It is the oldest one in the accounting book, but not to be missed out here. Forecast cashflows in a tough market should include all the implications of the worst case scenarios, including for example a euro collapse.
3) What operational changes have you made?
Many companies in the down turn have restructured their operations, perhaps had a round of redundancies. As and when the economy picks up do you have the right structure throughout your finance function to cope with the increase in demand?
4) Is your Supply Chain suitably flexible?
In conjunction with looking at your immediate global finance function, how is your wider supply chain geared up for a change in demand?
5) Is now the time for taking the best of the talent?
Many companies have cut back on their headcount; the current market is flooded with very experienced talent. Is their an opportunity for you to invest in great talent today to make the most of your opportunities tomorrow?
6) What investment opportunities are being created?
In any downturn, there are winners and losers. Some companies simply will not have the resources to cope with the downturn and this provides a buying opportunity for those with a stronger balance sheet. What are your ideal targets? How are you monitoring the market to find them?
7) What Divestments are you considering?
As well as looking for underperforming assets to acquire; take a look at your own portfolio. Which of your business units are under performing and no longer part of your core strategy? Perhaps consider if any are more prone to problems that an on-going euro crises will create.
8) Is your capital structure as it should be?
Since 2007 the economy has taken quite a battering, in that time how has your balance sheet faired? If it isn’t part of your regular analysis perhaps now is a good time to take a fresh look at the structure of your balance sheet. Are their needs for restructuring long term finance? Is an equity issue an option?
9) What strategic partnerships can be considered?
As well as assessing both investment and divestment opportunities what partnerships can be sought? As part of your on-going strategic plan you will know where you could benefit from a strategic partner. Perhaps it’s to enter one of the BRIC economies or expand your product offering. What will your ideal partner look like and how can you find them?
10) Your house is in order – who can you help and how?
There are numerous initiatives where the Government are asking businesses to help with the wider economy. What can your company do to help? Perhaps you could create a few more internships for new graduates or the long-term unemployed? Ask your key staff they may surprise you with their preferences for helping others.
Many of the questions above could just as easily be applied to the full executive board, however at the heart of the decision making will be the CFO and their core finance team.