These market conditions fall into three main areas: Money, Energy and Supply. The cost of capital, energy cost volatility, regulation, and geopolitical disruption have all impacted on business and will continue to change the cost base of a business on short notice. Modern, high performing finance functions recognise that the speed of change has radically increased requiring much higher precision and speed in forecasting and decision-making, to ensure that relying on yesterday’s information won’t sink today’s business.

Finance must be in the driving seat for designing new organisations which can cope with these changes, because no one else has a complete view across the landscape and making decisions in isolation leads to local failure. Only finance has visibility covering everything from input and overhead costs, to consumer preference, to the impact on margin.

We see this review reflected in the priorities of FTSE 40 controllers, who highlight the need for:

• (Affordable) Beneficial technology, getting the most return on investment
• Value from their data assets, to respond to shocks quickly
• Staying ahead of new controls regulations and requirements
• Responding to changes in ESG reporting and compliance

Getting these decisions right will give the business confidence to continue investing in growth platforms like new sales channels, new business models, store modernisation, marketing and developing their people, providing the right platform for the future.

Technology to beat the business trap – What are the ‘pivot’ options?

Businesses are faced right now with either pushing up their prices and hurting customers or cutting their margins and swallowing supplier price increases, neither of which is palatable; technology can offer a third option; using the capabilities we will describe in this article, the CFO can direct resources to help sustainably grow the revenues, margin, and remain competitive. How does this modern technological alchemy work?

The CFO supports the top line and bottom line of the enterprise, traditionally in a relatively passive manner delivering visibility and controls over profitability, liquidity, auditability, and compliance. Technology is giving the CFO the opportunity to become active in the health and growth of their businesses. To make the CFO a ‘star’ contributor to the business, at a time of severe challenge, we would encourage exploring the innovative finance capabilities described in this article.

Reimagine Finance Operations

The CFO has the opportunity to leverage technology, data and insights to model future business options indeed, to critically analyse prior decisions, what worked well and what didn’t. According to Gartner, decisions governing everyday operations often lack financial rigor, which can result in a loss of 3% or more of profits for organisations. This is primarily due to fragmented systems with siloed operations and an inability to access financial information in real time to make proactive decisions. As a result, CFOs recognise the need to modernise finance operations to reduce manual effort and enable their employees to focus on more value-added activities. A case in point is , which faced rapid growth after COVID-19, resulting in high volumes of data and an accelerated need for the company’s digital transformation. The e-commerce and fintech leader in Latin America achieved an 85% automation rate in treasury and cash management by streamlining their finance operations on a unified platform.

Delivering Assurance

It is expected that over the next 6 months the UK will be transferring from the Financial Reporting Council (FRC) to the Audit Reporting and Governance Authority (ARGA). Although recently the government have stepped back from their plans to introduce UK Corporate Governance Code led improvements around Financial Controls and CFO attestation statement on Fraud, the change in regulator is expected to deliver sharper teeth and greater pressure on external auditors to report more accurately. The upcoming changes to the Economic Crime and Transparency Bill, relating to Fraud, will include a new ‘failure to prevent’ offence and is currently moving through parliament, due in the firstquarter of 2024. A recent University of Portsmouth report outlined that Fraud may have cost the UK private sector in the region of £158Billion in 2022. Fraud still represents a 5% revenue loss for many organisations, money which if protected could be reinvested to promote growth. Business resilience is a key area where an integrated controls, risks management and machine learning/AI technologies have proven to deliver significant loss avoidance whilst also enabling businesses to remain on the correct side of regulatory requirements.

Optimise Cash Management

The CFO and the finance team need to have great visibility, effective control and collaborative execution for that finite, and most valuable business resource, cash! The poor understanding of cash flow is the key reason why many businesses fail. Businesses need integrated, intuitive tools that give them instant insights on the complete value chain, including receivables, payables, and associated supply chains. They need actionable information about cash, liquidity, and working capital, and their treasury platform should allow them to predict liquidity, make proactive decisions and mitigate financial risk. Zalando achieved 100% visibility into cash and accounts through redesigning their treasury and risk management and Zalando Payment system built their unique computing and monitoring model to provide deep insights into its factoring related cash flow movements and became compliant for regulatory requirements as a multinational .

Manage Profitability

Finance teams need to be active participants in managing profitability for the business, they may not be responsible solely, but they can best support the business by providing finance data and models in a timely, reliable and enabling fashion. The typical challenges that prevent retailers from proactive steering is the poor visibility to the real economic costs of products, customers and channels. According to Ventana Research, the most commonly mentioned challenge for companies in managing customer profitability is analytics. Using the right technology retailers can understand the real cost dimensions of their business and better control the margin challenges. Brakes – leading food service supplier in UK – achieved 2% improvement in margins through remodelling and digitizing their pricing and .

The CFO and his team have the opportunity to play an even bigger part in the future success of their business. Not only are the Finance team the keepers for financial data, they have the opportunity to proactively consult with the business teams; partnering in agile decision-making, providing business insights, actively supporting investment choices, helping identify success or failure in a rapid manner. Transforming the finance function provides the opportunity for businesses to escape the business trap of higher prices or lower margins, it can help you to pivot to increased competitiveness, revenue growth and success with customers, these are definitely the numbers worth pursuing.

If your organisation would like to know more about how these solutions can support your success, then please contact the authors:

• Shaid Latif, Industry Advisor Expert – Retail & Life Sciences at SAP
• Elif Kuralay, Industry Advisor at SAP
• Blair Robinson, Partner, Business Consulting at EY
• Matt Smith, Alliances Director at EY

The post Using Finance To Manage The Bottom Line And Pivot To Growth” appeared first on 51ˇçÁ÷UK News Center.

Almost every business in the region admit their supply chain needs improving (93%), with 32% saying they need to make significant changes in order to meet the challenges in the year(s) ahead. This is particularly acute for businesses in the Netherlands, where 97% agreed improvement is needed – followed by 87% in France and 84% in Belgium.

The findings from the report highlights that since the start of the pandemic, supply chain issues have been disastrous for businesses. One in two businesses have been held back by delays in production of goods/delivery of services, rising to almost three quarters (71%) in the healthcare sector, and a lack of raw materials (34%). The knock-on impact of these has been significant – with a third reporting these issues have led to a decrease in revenues (33%), 31% saying they have been unable to pay employees (31%) or make rental payments (41%); as well as a loss of customers (35%) and damage to their reputation (27%).

Given this outlook, it perhaps comes as little to no surprise that they’re pessimistic about when the issues will be resolved. Over half (52%) of businesses believe that their current supply chain issues will continue until the end of 2023, with only 1 in 10 predicting that these will be resolved by the end of the summer. Almost a quarter (21%) of businesses believe disruptions will continue until the situation in Ukraine is resolved.

This knock-on impact of this will be felt by consumers. With ever-increasing record inflation figures for many businesses, increasing the price of their products/services isn’t an option to cover increases in supply chain costs. Instead, staff will bear the brunt of any cost rise, as 63% plan wage/recruitment freezes and 51% plan job cuts, only further exacerbating the challenge of recruiting and retaining staff who may be forced to look at alternative job options.

Business in Europe looking to local and global options

While 61% of European businesses say they think that deglobalization in Europe’s supply chains would help economic growth – the feelings are not shared across Europe. Two thirds (66%) of business leaders in France support this statement – rising to 100% in Belgium, but it has significantly less appetite in The Netherlands (34%).

And while nearly two-thirds are prioritizing home-based supply chains, 100% near-shoring remains unrealistic in today’s intertwined global world, hence companies need to find the right balance between global and local.

To make this happen, businesses across Europe are calling on the government too for more guidance and support to overcome the supply chain crisis. Half of business leaders (50%) want governments to offer incentives to attract and up-skill people to available jobs and over a third (37%) want increased collaboration with industry – rising to 50% in France. Forty-two percent think the government should monitor Europe’s supply chain itself and invest where necessary (increasing to 51% in The Netherlands), while 38% would like increased industrial policy and trade policy that is targeted at overcoming supply challenges.

“Business leaders and Executives are confronted with disruption being the new norm. The ability to respond to any given disruption within a finely tuned supply chain represents a competitive differentiator in the battle for growth, consumer trust and market share”, comments Sascha Kunze, Head of Digital Supply Chain and Industry 4.0, Northern Europe at SAP. “Seamless information & data flow across the supply and value chain from product design to planning and handover to manufacturing are crucial. Businesses that invest into Supply Chain “fitness” will be able to navigate the next chapter of growth”

To overcome potential supply chain crises in 2023, more than 8 in 10 businesses see a need to move on from a ‘just in time’ supply chain model to a ‘just in case’ model. This figure increases to 9 in 10 in France and Belgium.

Elsewhere, findings from the study show that European businesses are exploring various other avenues to improve their supply chains:

• 65% plan to prioritize in country-based supply chain solutions
• 67% plan to adopt new technology to help overcome challenges in the next 1-2 years
• 67% plan to find new environmentally friendly supply chain solutions

“Before the COVID-19 pandemic, the supply chain was taken for granted. It was an intangible part of business operations that just ‘worked.’ In fact, logistics as a topic of conversation rarely made headlines and bulletins, certainly less so the dinner table, business meetings and on social media”, concludes Kunze.” With the spotlight firmly fixed on the supply chain, and as this research identifies, businesses across Northern Europe are having to re-think their supply chain policies to build additional resilience to withstand being affected by more acute issues than ever before.”

Customer quotes

Dieter Verlaeckt IT Director at Bru Textiles “Of course, we also felt the effects of the crisis. Transport was really under pressure, but thanks to our investments in software, we can control, manage and automate our costs and business processes well. That really makes a difference. The study shows that 1 company in 4 does not know how and where to start with sustainability. With us, it was actually the other way around. We rolled out software, based on sustainability considerations.Ěý Soon we saw how improving the flow of information in our supply chain also opened up numerous opportunities to better plan our inventory and, as a result, provide better customer service.Ěý By collecting and enriching data, we have a complete overview of our supply chain.”

Ěý

Olivier Kessler-Gay, Managing Director for Western Europe at Pandora: “Our challenge today is to meet the new expectations of a transparent, personalized and omnichannel shopping experience. By fully integrating our value chain, from the design of our jewelry and its manufacture in our workshops, to the supply of our stores, we have eliminated some of the problems faced by other market players. We can thus better anticipate the impact of macroeconomic developments and manage risks. While many uncertainties remain complex to grasp, the knowledge of our customers, the data and the tools at our disposal allow us to improve growth through a much more sophisticated approach and a finer understanding of demand.”

The post Supply Chain Crisis: Businesses Across Northern Europe Admit More Needs To Be Done To Ensure Minimal Disruption In The Year Ahead appeared first on 51ˇçÁ÷UK News Center.