For 49 per cent of CFOs, increasing profits was cited as being the top business objective of 2015. According to the survey, by using empirical data instead of relying on gut-feeling, financial directors are more likely to make decisions that will result in profit. This concept was echoed by 72 per cent of CFOs.
However,CFOs have claimed that visibility of financial information is often lacking in many areas, with only 43 per cent saying they had good visibility of financial information including: overall and business unit performance, product line performance and profitability, sales and labor costs, sales forecasts, raw material costs, and customer profitability.
Those within the manufacturing and engineering sector were the most likely to have a basic/legacy financial IT infrastructure and a necessity to rely on instinct for decision making. In addition, 70 per cent of CFOs said they still relied on Excel spreadsheets to gain access to data and were thus further limited.
Some 54 per cent have also claimed that decisions are often made opportunistically to exploit situations as they arise, while 34 per cent said that financial decision-making is hampered by a lack of time.
Read more on CFOs:
- Innis & Gunn CFO on BeerBond-fuelled growth plans and its new bar in an old strip club
- Unilever CFO resignation sparks expectations of investment opportunities or shift in senior staff
- The future of the CFO set to be influenced by five factors
While the survey data showed that CFOs recognise the importance of data visibility and accuracy, it also makes a case for best-practice decision making being a blend of facts and emotions.
Instinct, intuition and even emotion was considered by a significant number of respondents to have a valid role in decision making, with the most effective CFOs knowing when to use their instincts to guide and add value in the way numbers alone cannot achieve, as opposed to just using it to fill information gaps left by inadequate processes and infrastructure,” said Malcolm Fox, vice president of product marketing at Epicor Software.
Fox claimed thatin todays fast-paced environmenterring on the side of financial conservatism may put organisations at a competitive disadvantage. He suggested that many CFO’s need to have the confidence to make important business decisions quickly.
He stressed, however, thatreliance on gut-feel often led to over-confidence, which could cause organisations to miss market expectations, or even outspend revenues.
The solution is to have a modern financial IT infrastructure in place that delivers the right data, to the right people, at the right time, leaving the CFO to collaborate and be confidently opportunistic, Fox said.