The CFO Challenge


CFOs play a key part in corporate strategy but they also have prime responsibility for forecasting the firm’s cash and revenues, and for enforcing reality into the projections of others. A CFO has to model the “What-Ifs”.

What if a sale doesn’t close, what if a project slips and costs overrun, what if the achievable price for the company’s products is lower than forecast, what if financing is less attractive than hoped for, and what does it mean for shareholder value if a project is financed with equity at 25% below the current share price rather than at the current market price and so on ?

A public company CFO is also under pressure to make forecasts or give analyst guidance at the same time as results, but on what basis does the CFO or the board make these forecasts ? And did they have anything like enough information to form a view other than to say revenues grew by 30% last year and so we expect them to grow by at least 25% this year ?

Was the subsequent profit warning with resultant reputational damage actually foreseeable but simply not foreseen, when better fact based analysis and guidance might still have slightly affected the share price but preserved the corporate reputation, justified an earlier cost reduction exercise, and not lost the trust of some key investors ?

CONVENDIA can greatly improve the fact based analysis that a CFO needs to make the right recommendations and forecasts, and analyse the What-Ifs for cash, recognised revenue and shareholder value around variations in the assumptions.

It can also give the CFO a very good set of tools to be able constantly to monitor the financial implications of decisions he or she makes or recommends to a board or the achievability of forecasts the CFO makes to investors or to analysts.

 

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