04/04/2023 – How is the role of the CFO changing and what transformation is the finance sector currently undergoing? We discussed these questions at our CFO Roundtable on 16th March together with our speaker Dirk Spalthoff, Head of Deal Advisory at WTS Group. The current ongoing multi-crisis situation, characterised by the Covid-19 pandemic, the Ukraine war, the energy crisis, supply chain problems, and financing difficulties, ensures that CFOs have to cope with comprehensive transformation processes. Energy- and capital-intensive companies have come under considerable pressure to maintain cash flow over the past two years.

M&A market development

The M&A market is undergoing a clear transformation from a seller to a buyer market. Despite numerous market risks, there are isolated sectors with high M&A activity, although 2022 was the most difficult M&A year in the last two decades. Financing costs as well as issues such as ESG and sustainability are coming more into focus. Although the wave of insolvencies expected two years ago did not materialise, today's rising financing costs could further increase the number of insolvent companies and continue to pose major challenges to the M&A market in the coming months.

To succeed in this dynamic environment, companies must quickly adapt to new circumstances and position themselves appropriately. Thorough preparation and high reaction speed (transaction readiness) are crucial for success in transaction projects.

Challenges for CFOs

The finance function is changing, and CFOs are faced with the task of making it the active driver and strong backbone of change. To do this, they themselves must also go through the constant process of adapting to new circumstances. In the process, CFOs often encounter a variety of internal challenges, such as a lack of implementation strategies, prioritisation and insufficient staff training.

Automation, digitisation and transformation processes in companies can trigger resistance among employees. To overcome these tendencies, employees must take responsibility for their area and upstream and downstream processes. This mindset shift must start at the CFO level and extend to all hierarchical levels.

Since business processes need to be automated, which requires extensive and cost-intensive master data cleansing and data quality assurance, skilled professionals are needed here. Due to the shortage of skilled workers in IT, it is difficult to meet this demand for digitalisation experts with specific skills in companies. Companies that resist this because of the costs are hindering their own progress.

Tighter compliance requirements and a lack of project and change management further complicate the situation.

Reinventing the finance function

A key moment for CFOs

Initially confined to the operational level, the role of the CFO has changed dramatically so that this position now has even more influence on the company's success. Digital transformation has reshaped the way CFOs perform their role, for example by enabling the automation of processes and shifting the focus from traditional tasks such as accounting and reporting to strategic partnerships with top management.

This shift is an opportunity for CFOs to position themselves as bridge-builders between technical and professional competencies to point the finance function in a future-proof and competitive direction.

The importance of skilled professionals in the finance function

To successfully navigate transformation, companies must rely on skilled professionals who are able to adapt to the ever-changing demands of the modern business world. Thomas Hartenfels, Senior Director South at Robert Walters, points out: ,In order to expand the talent pool for qualified professionals, it is useful, for example, to train business English within one's own company. This can overcome language barriers and also attract international professionals with the necessary skills to ensure the success of the finance function and the company as a whole.’

CFOs as Architects of a successful future

In an ever-changing world, CFOs must embrace their role as drivers of financial transformation and meet current challenges. They should act as a partner to top management and thus take on an advisory role aligned with the company's strategy.

More information for CFOs

To increase the competitiveness of your company, it is essential to build and develop a highly qualified team. Find out more about salary and labour market trends in your industry here to help you make informed decisions.

If you are looking for a suitable candidate for your finance function, we would be happy to help. You can submit a job specification here.

Terminology

M&A

The term “Mergers & Acquisitions” refers to the merger of two companies through amalgamation or fusion (Merger) or the purchase of shares in another company or the company as a whole (Acquisitions).

Transaction Readiness

A company is said to be "transaction ready" if it is capable of carrying out a corporate transaction or financing at any time.