As every winning sports team, star athlete and leading coach knows, solid fundamentals support better offense, tighter defense and expanded options for taking home a medal. So too in the realm of finance, solid fundamentals remain the bedrock for evaluating opportunities, addressing business challenges, and, ultimately, making informed decisions that position a company for success.
“Cash is Still King,” a featured session at this year’s MIT Sloan CFO Summit, spotlights CFO panelists who will review how they use foundational finance, including attention to basic banking, automated systems and accounting measures, to position their companies for success.
“We know that CFOs are at the forefront of many complex issues such as compliance, risk management and regulatory updates,” said Jeff Dykstra, Principal, KPMG. “Fortunately, we also know that CFOs, with their understanding of business financials, are well positioned to manage through these complexities.”
Foundational finance refers to core activities and practices such as cash management, funding, and reporting. These are the building blocks of financial health and stability that enable companies to evaluate past performance as well as plan for the future. As such, these basics are critical inputs for contemplated business opportunities:
Cash Management Cash is king and CFOs need to have a clear view of cash flow and liquidity which in turn means managing receivables, payables, and debt. While advances in technology allow for a wide range of tools for forecasting, scenario planning, and stress testing, CFOs remain the linchpin in analyzing and interpreting the information.
Funding Financing strategies include the technical decision around adequate and appropriates sources – equity, debt or a combination of both. Managing funding also includes maintaining relationships with investors and lenders, effectively communicating financial performance and outlook.
Reporting Accounting is the language of finance, and foundational finance means accounting policies, practices and reporting that are consistent, transparent, and aligned with the standards and expectations of stakeholders.
With the world of finance continuing to evolve with new regulations, technologies and other challenges, the basics of finance remain a key focus to ensure agility, resilience and opportunity for success.