Chief Financial Officers must act now to survive an economy where cash is king

PA Consulting Group's book 'The zombie economy' examined the crisis and the impact it has had on four major economic groups, creating half dead, half alive zombies: banks, governments, companies and consumers. As a result Chief Financial Officers (CFOs) must prepare their organisation to survive in a new world in which they will encounter the powerful force of these zombies.

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CFOs have at least two years before they can start thinking about business as usual because zombie banks are too weak to support lending, zombie consumer’s wealth is too depleted to allow them to consume and zombie companies are saddled with debt they cannot service.

How can CFOs position their organisation to be a winner in the zombie economy?

CFOs must act now to secure the stability and success of their organisation by focusing on cost efficiency, analysing business portfolio effectiveness and fixing or disposing of any poor performing parts of the business.

There are four key priorities the CFO must address in the zombie world:

1. Secure liquidity: in the zombie economy cash is king. The top priority for any organisation has to be to save money and improve cash flow.  The CFO must ensure cash awareness and good practice are in place at the core of the business

2. Manage sourcing: the CFO should be driving the sourcing strategy which defines how corporate services are structured to optimise in-house shared support services versus outsourced options. This will allow more focus on business strategy and delivery with superior returns at an acceptable risk

3. Optimise the portfolio: the CFO must identify any baggage within their organisation and stop pouring capital into these parts of the business. Even in good times, it is inadvisable to allow good parts of a business to cross-subsidise poor ones. In bad times it can be fatal. Managers must fix the baggage or sell it. This will allow them to exploit the opportunities which will emerge from the upturn 

4. Exploit information management: while the world moves at zombie pace, risk will move faster. Given the volatility and uncertainty of the economic environment, effective business intelligence is more important than ever. It helps a lot if you know where your business is, what your markets are doing, and what your customers think. Financial leaders need to exploit the analytic potential of information to run the business where downside is prevalent.
   

To order a copy of 'The zombie economy' please click here.

To discuss how to steer your business successfully through the zombie economy please contact us now.