In recent years, the role of chief financial officer (CFO) has never been more challenging as it is fulfilling for those who hold this position. From geopolitical uncertainties to changing market dynamics, from technological innovations that are paving the way for new business models, and from calamitous weather disturbances that are reminding business leaders about the importance of addressing climate change today for a sustainable future tomorrow, the CFO has an important seat in directing the future of the company, the industry and society.
Recognising the differences in regulation and market dynamics, FutureCFO has approached CFOs from around Asia to discover their learnings, experiences and approaches in handling the myriad challenges that they face in 2023 and their expectations and plans for 2024.
“I don’t know why but it always seems that the finance function is seen as a cost centre. I would like to challenge that notion. In fact, (as a CFO) I business partner a lot with other departments, including technical, sales, etc. I do a lot of outreach,” he revealed.
Mo says that the perpetuation of the finance function as a cost centre, has resulted in pressures to keep the finance department ‘small and lean’. “The theme for 2023 was how to get the most from a small and lean finance team,” he concluded.
The outsourcing of finance
According to Reto Brunner, partner advisory, PwC Switzerland, large companies started delegating financial functions to external providers a long time ago. The outsourcing trend is now occurring among small and medium-sized companies.
Asked for his take on the outsourcing of the finance function, Mo agrees that for small organisations it makes sense to outsource certain functions like accounting and taxation to professional firms. For larger organisations, the better option may be to outsource to a shared services function that is within the control of the company.
He observed that large companies operating in Singapore have set up finance-shared services in locations like India and the Philippines. “You can do that to enjoy the cost efficiencies, but it has to be internal, so you have better control,” he opined.
The role of the CFO in 2024
PwC says that in 2024, the complexity and scope of the CFO role will only grow, and with it the finance leader’s influence in the organisation. PwC says, “From financial expertise to strategic decision-making to risk and stakeholder management, successful CFOs should possess a diverse skill set to help guide companies through ever more complex business landscapes and financial and regulatory environments.”
FutureCFO noted that sustainability and support for all things environmental, social and governance (ESG) were an important priority in 2023. PwC believes this will continue in 2024.
PwC says ESG reporting requirements have created a sense of climate urgency among executives, including finance leaders. “While complying with these requirements may require a complex transition to investor-grade reporting, experience in accounting and controls will be critical to a seamless transition,” said the advisory firm.
Mo concurs adding that sustainability and ESG reporting will be an important priority for CFOs in 2024. On a personal note, he expressed disappointment with one of the outcomes of COP28 wherein it was stated that the new environmental sustainability direction was to transition away from fossil fuels. He reiterated that ESG reporting remains an important topic and challenge for all.
Another topic that will be important in 2024 is Pillar Two tax reform.
Click on the PodChat player to hear Mo describe in detail the importance and evolving role of the CFO in Asia in 2024 and beyond.
- In describing the CFO’s role in 2023, where is the focus/priority or priorities this year?
- Do you see a trend among CFOs to outsource certain finance functions to keep the team lean?
- For 2024, what do you anticipate will be the expectations of the CFO and the finance team?
- Among the many priorities of the CFO/finance team in 2024, which in your opinion, will be most challenging?
- Of the many technologies available to finance, which for you offer the greatest value to the function and the company in 2024?
- I understand that talent remains an issue even within the finance function. In your view, which functions within finance are most challenging to fill/retain?
- For those looking to build a career in finance, what is your recommendation?
- What are your expectations for 2024?