A CFO's perspective on current business needs

Sunanda Pieries a Chartered Accountant by prof- ession presently residing in Sri Lanka with over 30 year experience in the industry in vast business segments which includes multinational companies. He started his career way back in 1992 in a blue chip conglomerate namely John Keells Holdings in Sri Lanka and completed his Audit related training at Price Waterhouse  Coopers. Post qualifying, the many business segments he has  worked in are, Audit, Shipping, Printing, Manufacturing, Business & Know- ledge process outsourcing, FMCG, Agriculture, Coco- nuts exports and Tea.

In a conversation with Prisila, a correspondent in Asia Business Outlook Magazine, Sunanda discussed the impact of technology on finance, staying updated on tech advancements, effective long-term value creation in changing markets, and a growth-driving financial strategy.

How has the CFO's strategic financial leadership evolved in the past decade, and can you share a specific success contributing to financial growth?

The CFO role has evolved significantly in the last few years. I currently perform roles in Information technology (IT), Legal (Commercial Law), Internal Audit & Business process re-engineering , Risk Management, Budgeting, driving Corporate strategy  and Procurement in addition to the role of core Finance .

Having being exposed to the  Business Process Outsourcing Industry (BPO) and having worked closely with multinational clients  based in Europe, I could state that one of the key areas they expect the CFO to take leadership is in ICT (Information Communication  Technology). Owners / Shareholders and Board of Directors of companies expect the CFO to identify Management information (MI) needs from a business perspective and ensure that the IT personnel can develop MI reports and tools which gives the required information on real time, customized to Board of Directors requirements and accurately. Business process automation and robotics to efficiently streamline repetitive tasks were other key elements companies look at.

Being able to give companies solutions in MI and process automation has led to these companies improving their bottom line via cost savings and improving market share by actioning on critical data analysis done especially in sales & marketing spheres. 

How has the integration of technology impacted the finance function, and how do you stay updated on technological advancements in finance?

With Artificial Intelligence being so prominent in this fast paced dynamic world, the CFO can play a pivotal role with support of the IT personnel & Data Scientists to deliver business critical information at speed. The CFO needs to work closely with IT and be update on new enterprise resource planning systems (ERP), cyber security, MI and AI tools development relevant to the Industry the CFO is working in.

I have the advantage in mu current workplace and even at previous work places where the IT function came under the CFO purview which made it mandatory that I keep abreast with all new developments pertaining to the IT industry

How has the globalization of business affected the CFO's responsibilities, especially in terms of compliance and regulatory challenges?

As quoted in the bestselling book “The world is Flat “by Thomas Friedman, technological innovation has connected the world. And he sees this as a "flattening" of the world, as the global playing field is being leveled. On the positive this has lead to more uniformity in financial reporting with International Financial Reporting Standards ( IFRS ) being accepted around the world. However there are challenges in terms of compliance as IFRS is more principle based framework allowing more flexibility and includes estimation which could be subjective. The CFO faces many regulatory challenges especially with the Department Inland Revenue in meeting tax compliances. With more global business transactions taking place and companies setting up overseas operations in order that they could compete in global markets Transfer pricing is a key challenge that the CFO needs to master and ensure businesses are complaint with the relevant global tax regulatory requirements.

"In today’s world new product development and innovation is key for business survival to stay ahead of competition and to be able to keep our customer satisfied"

How do you approach optimizing the capital structure of an organization, and how has this approach changed over the past decade?

This is a key element for any business and its critical that companies get their gearing ratios aligned (Debt / Equity ) and ensure that they minimize the weighted average  cost of capital. In the past companies were predominantly equity driven and had limited access to global markets. . However with globalization and exposure to different currency markets, business are now able to leverage on same, secure low cost debt funding and grow their business.

In your opinion, what approach is more effective for adapting long-term value creation to changing markets, and can you cite a financial strategy that drives sustained organizational growth?

With my past experience I would go with a 60: 40 Debt : Equity structure and may increase further to even 70: 30 based on availability of low cost funding which would ensure minimize weighted average cost of capital. In today’s world new product development and innovation is key for business survival to stay ahead of competition and to be able to keep our customer satisfied. These new products have to be also made available at the least cost of production hence the project funding need to leverage on low cost debt wherever possible ensuring an in depth feasibility study is carried out debt capital obtained aligns to the business cash flow and pay back calculations.