Report: 5 key priorities for CFO planning post-pandemic
Optimism, albeit cautious optimism, is prevailing in business circles across APAC. That’s according to the recently released 2021 CFO Insights Survey Report from Tricor Group, Asia’s leading business expansion specialist, which features insight from 600 CFOs worldwide, with a focus on key APAC markets.
“Rather than waiting for a ‘return to normal’… CFOs are charting new paths forward now,” says Lennard Yong, Group CEO of Tricor Group. “Notably, the APAC CFOs we polled were largely optimistic about 2021 with 58% expecting better performance compared to 2020.”
And some Asia-Pacific countries are more optimistic than others. With COVID-19 mostly under control in mainland China, the country’s V-shaped recovery is fuelling optimism it seems with 69% of the firms surveyed in China expecting their businesses to perform better or significantly better in 2021 compared to 2020. Finance leaders in Singapore are even more optimistic, bullish even, with 77% expecting business in 2021 to be better or significantly better than 2020, while in Malaysia, which has not fared quite so well in containing COVID-19, optimism is more cautious at 65%.
So, while the still unfolding pandemic continues to trigger waves of uncertainty, CFOs are shifting the focus to positioning organisations for seizing opportunities in the rebound.
According to Wendy Wang, Group Chief Financial Officer & Group Chief Operating Officer of Tricor Group, “as concerns about cash preservation are addressed, the CFO will focus on ensuring that the company is positioned to operate effectively in the 'next normal'”. And, adds Wang, this involves “making operational improvements to raise productivity, revising the investment portfolio and bolstering the finance function's capabilities” with continuous digitisation being “core to success in these areas”.
In fact, the pandemic provides a profound teaching moment for finance leaders to rethink their operating models.
Key priorities for CFOs as they navigate post COVID-19
So, what five key priorities should CFOs be considering as they navigate the unpredictable and unprecedented business landscape post COVID-19.
1. Recalibrate operations to make organisations more resilient, including the implementation of automation and robotics When asked what their top priority was for 2021, CFOs prioritised ‘recalibration’ with one in four seeing it of ‘utmost importance’. In Hong Kong, 28% state that this year they will recalibrate operations to make their businesses more resilient, a priority that ranks ahead of adapting sales and marketing for more revenue and reviewing people resources; while a third of Malaysian CFOs intend to do so.
2. Identify areas where the highest operational efficiencies can be achieved Some 13% of CFOs surveyed identified reducing exposure to office leases and utility costs as key areas of their cost-cutting strategies in 2021. This is in line with many businesses thinking about remote work opportunities beyond the pandemic. Take Singapore. More than a third of finance leaders reported that reducing exposure to office leases and utility costs would be their top priority when reviewing operating expenses. However, that was not the case in Hong Kong despite both cities' costly commercial real estate, implying that firms in Singapore are more likely to adopt longer-term remote work arrangements.
3. Outsource processes to third-party partners that deliver economies of scale, efficiently process data and tap digital talent Nearly half of CFOs surveyed revealed they would consider outsourcing several non-core functions, including accounting and payment processing, payroll and HR administration, tax compliance, corporate secretarial services, internal audit and regulatory compliance. For CFOs in China, compliance was the most likely function finance leaders would outsource. When it comes to outsourcing core functions, though, APAC countries are more hesitant. In Hong Kong, 61% of finance leaders said they were reluctant to outsource finance and accounting. According to David Ong, Deputy CEO, Tricor Singapore, data suggest that “CFOs in Singapore, as well as other markets in Asia-Pacific, are acutely concerned about their organisation’s financial data when it comes to outsourcing finance functions”. To navigate such concerns, Ong suggest engaging partners that are well-established and have a strong track record to adopt best practices in data security, and also conduct due diligence.
4. Accelerate digital transformation and technology adoption efforts Many organisations expect remote work to continue post-pandemic. To support hybrid environments and unlock the benefits of virtualisation, companies will need to digitalise functions such as customer service, supply chain management, finance, human resources and payment processing. More than other main APAC countries, like Singapore, Hong Kong and Malaysia, China is prioritising digital transformation investments this year.
5. Detect more functions that could benefit from third-party outsourcing The majority of respondents (21%) indicated that accounting and payment processing are the most likely functions they would outsource, followed closely by tax compliance, HR and corporate.
The report also suggests that CFOs must leverage specialised expertise across key areas, including business continuity planning (BCP), governance, risk management and compliance (GRC), environmental, social and governance (ESG) and digital transformation.