London FP&A Circle on 27 January explored Cash Flow Planning - Why the Traditional Profit-Driven Mindset Needs to Be Rethought.
FP&A teams have been more focused on Profit and Loss account. However, in high uncertainty, FP&A's need to develop a "Cash Flow" Mindset. So what does this involve?
By Joao Almeida, CFO Hubs at A.P. Moller-Maersk, and Rich Feldman, Head of Marketing at Finario
CEOs that are more strategically oriented and less numbers-oriented tend to want to partner with a CFO who has a strong command of the numbers. When that's not the case, and we have CEOs or leadership teams that are focused on their matrix, it can be challenging for the finance organisation. In the new article, Joao Almeida and Rich Feldman discuss some of the current challenges facing leaders in finance, and the role of capital planning in a time of increased uncertainty.
In many companies, the processes and tools to manage profit and loss (P&L) are quite developed, but the cash flow is not always understood and does not always receive the same level of attention. What are the reasons for this and how can FP&A improve the situation?
In finance, we’re constantly chasing various financial metrics. But focusing on a narrow set of metrics often causes problems. For example, a Market Share growth strategy sounds great, but it often forces you to discount price or significantly increasing acquisition costs.
As a result, the strategic outcome is often short-lived and can even result in decreased financial performance. What can be done to prevent bad strategy and why are we so surprised each and every time we repeat these same strategic mistakes?
In his presentation, Alessandro Cardito, Global Consumer Beauty FP&A Director at Coty, outlines three main short-term priorities that FP&A should keep in mind.