The biggest US bank failure since 2008 underscored the fundamental importance of best practices.
That’s what 12 top finance leaders from various industries said in a series of PYMNTS interviews in the immediate aftermath of the Silicon Valley Bank (SVB)-led bank failure in March.
While the direct market impact is beginning to abate, the crash has left chief financial officer-led pressures on liquidity levels and cash availability at the board, management and even employee level. The need for more frequent communication was highlighted. There was also a clearer focus on banks’ risk frameworks, working capital management strategies and relationship redundancy tactics.
Carlos Sanchez-Arruti, CFO of payment solutions provider Mangopay, said March’s mini-banking crisis “tested the discipline CFOs need to have when it comes to cash management and finances.” back to
He said the new macro environment will force finance leaders to move away from a “sexier focus on fair growth” and rely more on tangible fundamentals of controllership to ensure long-term visibility into working capital and profitability. He added that turning to direction has become essential.
CFOs focus on protecting their balance sheets
“One of the CFO’s main responsibilities is to protect the balance sheet. It’s your lifeline,” said Pat Dillon, CFO of Flock Freight, an intelligent supply chain platform.
“It’s the ability to invest in growth and nurture technology. It supports almost every point of strategic differentiation,” Dillon told PYMNTS. and how important it is to avoid single points of failure, even for one day.”
Dillon said that finance leaders can best achieve their goals by articulating strategic priorities and business environment assumptions, interacting with other executives, and stress testing those scenarios with different priorities and different tactics. He stressed that even in difficult times, it can facilitate adjustments and accelerate growth. .
“That’s when the CFO job really gets really rewarding,” he said. “…having a strong finance team [in today’s environment] It can have a big impact on your organization. ”
Joseph Pergola, finance director at media software platform Connatix, also told PYMNTS that it’s an exciting time to “become CFO.”
“Cash is king, and understanding a company’s cash flow, burn rate, and ensuring proper financial capacity and security is critical,” says Pergola.
Also Read: SVB collapse is causing companies to rethink their funding, cash management strategies
Dean Neese, CFO of location intelligence solution Placer.ai, emphasized to PYMNTS:
“Where you spend your money is your strategy,” Neese stressed. That’s why taking a proactive approach to resource allocation is mission critical. By working with executives from other departments, CFOs can “define great strategies for the future,” he said.
“This kind of market requires you to have the back of your head and be fully aware of everything,” said Gary Vecchiarelli, CFO of Bitcoin mining company CleanSpark.
“[A]After all, CFOs cannot forget their fiduciary responsibilities and core principles.
Focus your finance team on risk management best practices
March’s events focused on a new factor for financial leaders: banking risk. The current macro environment makes it imperative for finance leaders to become more strategic and proactive in managing banking relationships and cash diversification strategies.
“Emerging from that activity, we have considered updating our financial policy to reduce the risk of the type of institution [we bank with] We also ensure that we continue to diversify our investment vehicles and ensure choice between multiple low-risk banking partners,” Nathaniel Katz, CFO of e-commerce software provider Rokt, told PYMNTS. increase.
Kevin Held, Hazeltree’s CFO, told PYMNTS that CFOs should “keep their eyes wide open, assess and catalog risks, and then figure out which banks are going to fill those holes.” We have to decide which is best for.”
Held added that dialogue should continue between CFOs and business economics.
“If there’s a silver lining, it’s that the SVB meltdown has caused more communication between banks and accounting teams,” said Frank Corich, CFO of Karbon.
“The CFO’s role of being a true partner to the CEO has greatly improved in terms of communicating with our employees, understanding what’s going on in the market, and translating that into impact for us. said CFO Kiran Hebbar. He told PYMNTS on the identification platform Alloy.
Karen Hartje, CFO of fintech platform Sezzle, emphasized to PYMNTS that cross-departmental communication is essential for business success.
Sezle used SVB for the organization’s operating accounts until the day the bank collapsed. Hartje stressed that the lender’s failure “changed the conversation” about banking risk for her organization.
Ori Franco, CFO of Density, told PYMNTS that the macro environment is shining a spotlight on certain business fundamentals that didn’t get much attention a year or two ago.
“It used to be about growth and then size, but now we’re thinking about things like unit economics and improving margins,” Franco said. “Growth is still an important metric, but the idea now is to do it in a healthy, responsible and even creative way.”
He added that there is a “discoping” of certain priorities and investments as part of this renewed focus on healthy growth flavor.
For some CFOs, the most pressing concern is macro-climate rather than what happened in March.
ABBYY CFO James Ritter told PYMNTS: “In my opinion [dealing with inflation] It remains a top priority for many corporate finance executives. ”
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