Building a planning infrastructure that can respond quickly to changing circumstances is essential for CFOs, financial heads Adam Meister and Aneal Vallurupalli said in a recent Airbase Webinar.
Meister, CFO of revenue operations platform Clari, and Vallurupalli, CFO at automated bill pay software firm Airbase, discussed why prizing agility is key for CFOs bracing against inflationary pressures.
They also addressed how recent moves by the Federal Reserve affect the business environment, and how their respective companies and other firms can plan for rising challenges — without giving up growth.
The Fed recently raised interest rates to help tamper inflation and many CFOs this year have been forced to revise their plans for borrowing, investment and capital structure.
Look at early indicators
“All good finance executives will scenario plan, but you cannot scenario plan yourself to death,” Meister said in the webinar.
Before becoming CFO at Clari, Meister was the CFO at Talend, where he guided the company’s transition to the cloud and helped take the company private. Meister also has over a decade of experience in technology investment banking, according to his LinkedIn profile.
In terms of Fed policy, it is tough to get a read on how long these hikes will last, Meister said. “It seems to me that weighted inflation has started to really take hold in the job environment now which suggests it will not dissipate anytime soon,” said Meister.
Along with persistent high inflation, the economy could also be at risk for stagflation, or zero economic growth. Focusing on positioning your business to be agile in an uncertain macroeconomic environment is key, the finance chief said.
“You need to ask yourself, what are the earliest leading indicators that you can watch in a business that can signal change, and in that change, trigger different courses of action.”
Add milestones
“The key is to know what we can internally do to improve our outcomes versus what is external that we have no control over,” said Vallurupalli in the webinar.
Vallurupalli’s background includes a stint as VP of finance & operations at Mattermost, where he still serves as an advisor. He also has extensive experience in tech mergers and acquisitions, according to his LinkedIn profile.
As an individual finance executive, the timing of when the Fed will raise rates is not affected by decisions you make, said Vallurupalli. But, you do have an impact on how the company responds, he said.
“There’s no one perfect solution for predicting revenue …, but there are solutions to help triangulate where you need to go,” said Vallurupalli.
The finance executives advised adding daily and monthly milestones so that your finance team can meet their quarterly goals. “The idea is that you are creating daily indicators that you can look at quickly. In sports, some say the best coaches are the ones that can make mid game adjustments, it’s the same idea here,” said Vallurupalli.
