Jay Nibbe, Ernst & Young, on how today’s CFOs help set the strategy of their organisations

In recent years, accounting firm Ernst & Young has commissioned a string of CFO surveys that look at every aspect of the expanding role for CFOs, from their career paths to their role in external communications and their involvement in shaping corporate strategy. The results speak for themselves. In an interview with CFO Insight TV, Jay Nibbe, managing partner EMEIA Markets at Ernst & Young, explained that most CFOs spend 50% or more of their time on strategy, which is “almost necessary” in the current economic environment. The growing importance of strategy is underpinned by a staff of “world-class” and highly specialised individuals who support the CFO, including treasurers, controllers and accountants. “While it may seem they should spend more time on the operational and financial side of things, they now lead much larger and much more professional teams,” Nibbe says. “This has allowed the CFOs to step out of the details and get much more involved in the strategy.”

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CFO expert Clifford: Communication is key for both cash-rich and cash-poor CFOs

Scarce bank lending coupled with strong corporate earnings and flush bond markets have created a bipolar world for CFOs: they either face a bitter liquidity crunch or huge cash piles building up on their balance sheets. Speaking on CFO Insight TV, Les Clifford, a partner at professional services firm Ernst & Young and a leader of their CFO programme, discusses their new report looking at how CFOs on both sides of the divide can cope with the challenge.

For chief financial officers at cash-strapped companies, raising liquidity is a daily challenge. This requires open communication with the lenders, Clifford says. “What you want to avoid is crisis management. Oftentimes many people try to believe that around the corner it’s going to be resolved, there’s going to be cash.” Instead of open discussions about long-term solutions with their lenders, they opt for short-termism.

However, this can be a dangerous approach, Clifford warns. “Most lenders are good at looking at the market and making their own views of these companies already,” he says. “So coming together to discuss each other’s perception can break down walls. ... Make [the lenders] a partner more than purely a lender.

Chief financial officers at cash-rich companies seem to face the easier task. However, they too must ensure that their message is being understood, Clifford says. “The question is: Are CFOs communicating their decision clearly enough to investors?” Many finance chiefs may not do all they can in this respect, leaving them vulnerable to investor backlash.