‘Since the pandemic, companies have realized how essential Finance is for responding to the changing market,’ TriFinance Managing Director/COO Xavier Gabriels says. ‘The pressure on finance departments has increased, forcing CFOs to constantly think ahead while managing the situation as-is.’
The CFO role going through rapid change
Xavier Gabriëls has been at the helm of TriFinance since 2018, assuming the roles of Managing Director and COO since January 2020. From the front row, Xavier has seen how Finance departments and the CFO role have gone through rapid changes in recent years.
Continuous transformation
Which are the major challenges that companies face these days?
Xavier Gabriëls: ‘There are three major evolutions that companies have to take into account today. First of all, there's this massive acceleration that forces companies into continuous transformation. In addition, many businesses can’t fill job openings because there are not enough professionals with the right combination of soft and hard skills to devise, set up, and implement that transformation. A third element is the development and adoption of platform-based (cloud) systems and their security, which have a major impact on the organization and operation of companies.’
The multi-challenge challenge
If you had to pick one challenge, which one would it be?
Xavier Gabriëls: ‘That is the problem. As a company, you don't have the luxury of choosing which challenge to focus on. You have to tackle them all. Take the hotel industry. In the past, as a renowned hotel, you had time to keep up with the competition. With its platform, Airbnb has now completely turned the sector upside down. The same applies to all companies: tomorrow a competitor may arise that undermines your entire business model. You have to be alert for that. You have to be able to act swiftly. And you need the right people for that.”
What impact do these challenges have on finance departments?
Xavier Gabriëls: ‘Finance departments traditionally do risk mitigation through control, by looking back in time and making predictions for the future from there. Looking back does not offer any guarantee for the future. That means organizations have to set up a completely different system of budgeting, reporting, and cash flow management.’
Most transformations fail because not enough thought was given to the new structure, technology was leading, and people did not receive proper training.
Every CFO’s priority
How do you deal with that as a CFO?
Xavier Gabriëls: ‘The priority for every CFO is profitable growth, and for that, you need two things: your department must be able to work more efficiently, so you start looking at smart digital transformations, and you need to manage risk. That sounds obvious, and yet in practice we see that it is often very difficult.
‘Part of the explanation is that Finance is the linking pin – now more than ever – between many departments, from HR to Sales, from IT to business. So you need systems that accurately capture and collect the data, which is not really an easy job.
‘For example, an organization can have a registration system at customers’, and another internal registration system. Or they might still not know customer profitability because the business uses a different platform than the Finance department. Those double entries are inefficient, and they make it difficult to draw clear lessons and make decisions.’
Recruiting financial profiles
How do CFOs eliminate those inefficiencies?
Xavier Gabriëls: ‘In the first place, by working closely with their peers, the other C-level executives in the organization. Board and management are becoming more and more multidisciplinary, and that's a good thing. But it also means that CFOs must learn to communicate in a different way: How do you present financial data to other decision-makers within your organization in an understandable way? CFOs today need other skills than just pure financial knowledge.
‘Second, you need to assign the right people to the right project. Also within financial teams, you need very diverse profiles that can deal with change, who can understand the systems, and ask the right questions. And then we come back to one of the challenges I described at the start: finding the people with the right skills.”
And those are hard to find?
Xavier Gabriëls: ‘At TriFinance we recruit financial profiles ourselves, in the role of consultant. We cannot help noticing that it is a big challenge to find the right people with the right skills. That’s why we are really committed to on-the-job learning, knowledge sharing, and training people. We also map our consultants on their soft and hard skills, knowledge, and behavior using a specific framework called Behaviour, Skills & Knowledge framework.’
Digitize smartly
Do you think there is a mismatch between market expectations and the Finance curriculum offered by universities and colleges?
Xavier Gabriëls: ‘Finance jobs today are very dynamic, offering many possibilities. It is essential that students try to develop an entrepreneurial mindset during their education. Finance departments also need data specialists or digital transformation specialists.’
CFOs often take the lead in digital transformations these days. What needs to be taken into account during that process?
Xavier Gabriëls: ‘In the first place, you have to digitize smartly, so that you don't digitize existing problems. Good governance must be established. Most transformations fail because not enough thought was given to the new structure, technology was leading, and people did not receive proper training. I think the most important lesson is: there is no one size fits all. Every company, and every finance department, has its own path to follow. Starting with the right data and processes is an absolute precondition for implementing digital/AI in the right way.’
Zero-based budgeting
Is there one concept that you would like to draw attention to?
Xavier Gabriels: ‘Zero Based Budgeting. The question is: how do you set up a budget in such a way that you don't just look at last year’s budget and add two percent to it, but put up existing budget items for discussion.
'Finance should recurrently ask if the organization should keep existing cost centers, expenditures, etc. It is a very valuable exercise to eliminate existing inefficiencies. And the company can use the budget that becomes available this way can be used by the company as a buffer or used for new things that really matter, such as digitization or marketing. It is a very efficient way to innovate, and to stay one step ahead of the competition.’
Translated and adapted from an interview previously published at House of Executives.
