While they’ve always had to fulfill the mandate (close the books, collect the cash), keep the trust (be the fiduciaries), and make things better (apply new standards and processes), CFOs are more than just the keepers of the numbers—more so now than ever before.
They’re strategic business leaders, capable of impacting important relationships—and of course—the ultimate end game: valuation.
And at their core: managing the company’s risk, as financial risk impacts all other areas of risk in a business.
Increasingly CFOs are relied upon not only just to communicate, advance the brand, or interpret risk, but also to understand potential outcomes, scenario build against adverse events, and help companies define the path that’s right for them—taking the reins based on what they see in the near-, medium-, and far-term.
All of which directly depends on their own financial position AND the financial health of their commercial partners. RapidRatings CFO-clients incorporate the following into their workflows:
- Discovering public & private supplier and credit trends via the FHR® to foresee credit or insolvency issues—before they impact balance sheets or important business relationships.
- Getting advanced insights and context into financial statements, straight from the public and private company source—seeing beyond reported numbers and organizing data segments, geographies, and categories against vendor-peers, whole sectors, and overall portfolios.
- Stress testing their portfolio to understand the impact of additional shocks—applying the results to internal modeling and remaining compliant for any regulators.
Depending on the industry of practice, CFOs can be enveloped in layers of global regulation (viz. Dodd-Frank, CECL et al), and finance chiefs are asked not only to showcase current and future states of their businesses, but also provide proof of that vision to protect their own firms, the firms that rely on them, and the people they employ. Together with their teams, CFO’s should have modern capabilities, so they can not only foresee but actively collaborate with public and private company suppliers—beyond simple vendor management or too-little-too-late risk mitigation.
Our own CFO & COO, Pete Tantillo, describes how he advises RapidRatings’ clients and partners:
[Excerpt from StrategicCFO360; read the full interview here]
“As the strength and resiliency of your supplier base becomes more critical in the Covid era — where we have shortages of product and kinks in the supply chain — it’s more important than ever that you understand the financial health of your public and private suppliers, alike.
“We’ve developed a way for companies to engage in meaningful dialogue, with questions like: How do you know that those goods or services will be there for you in these challenging times? Can they meet your demand forecast with quality, every time? What internal and external challenges have your suppliers — and their suppliers — been facing since the beginning of the pandemic?
“You need to have transparent conversations with your business partners so that you can foresee mutual risks, mitigate disruptions and build more meaningful partnerships. You also need to go wider and deeper than a general credit evaluation. Even though such evaluations share DNA with financial health analyses, the latter incorporate other critical metrics: resiliency, growth potential, upside capacity and long-term value of a relationship. When you have that objective data, it makes conversations with your third parties stronger because you can influence their thinking or actions collaboratively and, ultimately, build a stronger supply chain. We believe that the most fundamental way to do that is by understanding their financials first, especially when it comes to private company suppliers.”
Request a demo and find out how RapidRatings can support your company’s predictive capabilities either as CFO, yourself, or as a team member collaborating with your company’s finance chief.