What’s next for tariffs? Few would try to predict with any certainty. And that’s just one of the volatile economic and geopolitical challenges organizations are grappling with today.
Guido Frantzen, CFO of Atlanta-based supply chain software company GreyOrange, feels your pain. He spoke with CFO Leadership about the challenges ahead and how finance leaders can best manage in this uncertain environment.
What has been the number one regulatory challenge that CFOs must manage these days?
The most consequential regulatory challenge has been the imposition of trade tariffs, which have had a huge impact on working capital and seasonal planning cycles. Shifting tariffs have made it difficult for businesses to develop accurate forecasts and operational plans.
CFOs play a crucial role in steering organizations through this new economic environment. At GreyOrange, we’re reevaluating our supply chain, exploring new partnerships in countries with lower tariffs. We’re also working closely with customers and vendors to jointly shoulder the impact on costs and minimize the effect on end-user pricing.
Another regulatory trend worth noting is the growing complexity of privacy regulation. At many companies, including GreyOrange, finance oversees the legal department. When cloud-based or SaaS companies launch in new international markets, they often have to navigate a complex new set of local privacy laws and regulations—and make sure their infrastructure is compliant. These efforts have significant financial and legal implications, which makes them an area of increased focus for CFOs.
What are some ways that CFOs can manage their future tech investments while still holding on to capital in an uncertain environment?
Look for ways to automate incrementally. Don’t assume you need to do everything at once. This is especially important for retail CFOs, given how fast conditions in the industry are changing. Analyze your inventory nodes holistically and take a nuanced approach. Automations such as AMR-assisted picking can deliver quick efficiencies without the need to refit an entire warehouse.
Another capital-retention strategy for retail CFOs is to fulfill ecommerce orders from brick-and-mortar stores. For many retailers, the “ship from store” option can be a powerful weapon against online-only competitors. Fashion retail in particular ages quickly, and a large percentage of products ultimately end up at discount stores—or eventually, in the landfill.
Smart pricing combined with flexible delivery options can help reduce spending on inventory that eventually needs to be discounted or discarded. This in turn preserves capital for other uses, including future tech investment.
You’ve worked for biotech, manufacturing and smart grid companies, including Siemens. What lessons have you learned along the way?
I’ve learned to manage finance as an entrepreneurial business. As a finance leader, you’re not just paid to close the books. You’re paid to deliver incremental value that helps your colleagues perform at a high level.
Too many businesses mistake quantity for quality when it comes to metrics. I try to take time to understand each business unit’s strategy and devise measurements that match their strategic objectives. I ask myself, are we measuring the right things? Are we working toward meaningful targets? Are we advancing the company’s strategic goals?
I’ve also learned that a close partnership with your CEO is essential. There will be days when your internal role is to be both the “grow CFO” and the “no CFO.” In both cases, it helps immensely if you and the CEO are aligned on priorities.
Any advice for aspiring leaders just entering the finance profession?
The CFO role requires both technical and personal skills. When I started my career at Siemens, I would have been petrified to take on the public-facing duties of a senior finance leader or CFO. But it’s an ability you need to develop. An important aspect of the job is articulating complex financial topics to non-finance experts.
The more you put yourself forward as a communicator, the faster you will grow as a finance leader. In retrospect, I wish I had sought out more public-speaking opportunities, presenting to audiences outside the finance department.
I also advise finance managers to think about how their role fits into the larger strategy of the business. How does accounting or FP&A add value? As a CFO, I’m going to pick the finance professionals who show they understand the big picture and, where needed, can go in depth on financial and technical topics.
