Nothing is simple in growth, nothing is fundamental in financial fundamentals.
In light of ongoing macro challenges and softening economic conditions, savvy chief financial officers (CFOs) are focused on protecting their balance sheets and prioritizing healthy growth to ensure profitability. increase.
This, according to Carlos Sanchez-Arruti, CFO of payment solutions provider Mangopay, was highlighted in the PYMNTS CFO Series: What’s Different? conversation. The mini-banking crisis in March “tested the discipline CFOs need to have when it comes to cash management and finance,” he said.
“[Finance leaders] At the end of the day, don’t forget that cash is king. Careful management of costs and cash while enabling growth and maintaining a certain level of individual cushion is critical. ‘It’s down to his CFO’s ability to properly balance the trade-offs.
He said that in today’s environment, it is important to ensure that the CFO’s ultimate responsibility to protect corporate assets and shareholder value is not encumbered by the finance team’s “hype, growth and market opportunity.” emphasized.
Balancing growth and sustainable profitability
“The moment you start thinking short-term, it’s over. Sometimes it’s okay to lose the short-term trajectory of profitability to enable sustainable long-term growth. Your job as CFO is to: It’s not about being the “yes man” of the CEO. Your job is to create a healthy balance between supporting, boosting, and sometimes unpopular growth strategies. At some point, you’re going to have to pay Piper,” Sanchez Altti said, adding that CFOs primarily work for shareholders and investors to preserve and protect the value of the business at all costs. He says he has a duty.
Back to the basics of a strong cash position and set realistic growth targets as companies across industries begin to look inward and look at their operations to identify and accelerate efficiencies is just one of the approaches companies are taking.
Sanchez-Arruti emphasized the importance of ongoing discipline in managing cash, saying, “It helps us strategize and support business growth without losing track of where our cash goes and how we keep it. It emphasizes the importance of establishing a “strong managerial and financial base.” “
The mini-banking crisis has prompted many companies and many CFOs to go back to basics, moving from a “sexy posture focused solely on growth” to relying on concrete foundations of He said it was a “wake-up call” to turn to confirming that it has. Mechanisms that ensure visibility into working capital and long-term profitability.
Building a Productive Partner Ecosystem
Ultimately, CFOs should treat their company’s finances the same way they treat their retirement, Sanchez-Arruti said.
“[Banking relationships] is the pedigree of the service we provide to our customers, but it must be a strategic relationship, not just a tactical one. , whether it’s trustees, managers or strategic growth, wins over our ability to improve our own profitability,” he said.
Mangopay’s CFO said that building this style of collaborative and productive relationship is critical to financial leaders’ understanding of what’s happening in the market and the banks themselves hearing about new technologies, new data capabilities, etc. I emphasized that it helps to “listen”. Relevant information bits.
Beyond that, Sanchez-Arruti said all providers look the same to spread their company’s “eggs” around their various relationship “baskets.” Someone who understands Mangopay’s needs and is willing to provide features that enable their business to succeed.
“We need banking partners who can understand what we need to do in terms of integration, data management, and what we need to do in terms of real-time KPIs. Our customers, banking partners, And the money between the end users,” he said.
“It is important not only to manage the funds, but also to ensure a symbiotic relationship where the more we profit, the more they profit,” added Sánchez-Altti.
