Have CFOs Moved Beyond Cost Reduction and Supply Risk Management?

I was just saying to someone in the trade publishing business earlier this week how procurement organizations have lacked a more executive-focused but moderate-to-highly circulated publication compared with finance groups who have enjoyed the relative balance of ubiquity and decent quality of CFO over the years. And then the night after I told my friend this, I came across this article from said bean counter (correction: finance executive) rag that highlights for me that type of basic reporting and analysis necessary to actually get an executive to pick-up and read a glossy. Publishing commentary aside, if what it says is true about the changing focus of CFO attention, perhaps we should all pay attention to what the folks in finance are whispering about these days.

The column notes that finance's focus of late on a range of areas from "working-capital management to cost control to scenario planning ... has proven to be the critical factor in corporate survival". But might a new direction for CFOs and their direct reports signal a shift away from getting more involved in the same areas that concern procurement and supply chain on an everyday basis? Perhaps. Even though CFOs have "strengthened risk-management policies, identified a host of supply-chain vulnerabilities, and found ways to navigate in an environment in which forecasting is virtually impossible," the op/ed suggests that the emerging role of the CFO might be evolving past areas focused just on the bottom line including strategic growth areas such as M&A and geographical market expansion?

This would seem to be the case from a number of recent discussions I've had with colleagues and contacts on the corporate development side of the house, many of whom have received a more active charter from finance to get back into the deal game. Granted, in many of these cases, there's more posturing and due diligence going on than actual transactions. Still, the gap between free cash flow yield and corporate bond yield has not been larger for decades -- a classic leading indicator of the attractiveness and potential for deal activity.

When I look at this, it's clear to me that finance leaders might soon be taking less interest in cost and risk reduction in comparison to ways of potentially increasing the top line now that they've already cut as much waste out of the business as possible (while also buying themselves some metaphorical supply chain insurance at the same time if they've been so savvy). Because of this, might it be time to also re-evaluate our priorities to the business as well, helping the CFO in their new top-line focused endeavors? Perhaps.

Jason Busch

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