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Strategy and innovation
Keys to making financial decisions.
For Celia Leal, a good CFO needs several attributes. These include creativity, empathy and being able to see the bigger picture. But what happens when things do not go according to plan? How do you rectify key decisions of your strategy on the fly?
The future rarely corresponds one hundred percent to the forecasts, which is why, for Celia Leal, director of administration, planning and management control at Reale Seguros, the main challenge for a CFO is to at least ensure that what appears on a strategic document is achievable in practice.
“Excel can cope with anything, Leal says, because from a theoretical point of view you can think about what is going to happen, what the needs are and allocate budgets”. However, this is where the knowhow of this kind of manager comes into play. In addition to data, they must know the business in order to “understand what is happening, why and thus help make decisions if behaviour is not as expected”.
In Leal's opinion, the role of CFO has evolved over the years. They have become increasingly involved in making strategic decisions. “I think we are realising that the closer you are to the business, the easier your job will be, the more you can help and the more value you can contribute,” says the Reale Seguros director, who also considers it essential to have the ability to use all that knowledge to“ propose scenarios and understand sensitivities”as “the reality of the business in question” changes. This is essential, according to Celia Leal, so that later“ you can calculate the impact of these changes on the profit and loss account and on assets”.
As Celia Leal explains, CFOs "work with limited budgets" and that forces us to be "creative when it comes to meeting the needs of all areas, to think differently". For this, she says, it is important "to have a very rigorous, well-defined methodology, with very clear indicators" and that is precisely the job of the CFO, "to define these indicators first and then analyse whether they have been met or not" Leal explains.
Regarding the economic situation in the wake of the pandemic, Celia Leal is optimistic.
"The economic recovery that the country is going to experience, which will also affect businesses and companies, is going to help the growth of certain sectors".
Something that in her opinion will be especially noticeable in that "companies will export again, which means more turnover and growth". However, not everything is going to be positive in this new phase, since "we will also suffer the negative aspects of costs, inflation and supply shortages" Celia Leal warns.
Precisely, this coming economic environment is a clear example of the importance for a CFO of knowing how to find the balance between the positive and negative aspects of a hypothetical future situation, because in her opinion, the final success will depend on their ability to "define the most likely scenario based on probability analysis". In this sense, "at Reale Seguros we always have a part of the budget earmarked for future investments, explains Celia Leal, which allows us to have a part go to projects so we can anticipate these changes".
In this sense, the Reale Seguros executive highlights the importance of European aid, which will serve as an important "accelerator". But she also warns of the danger that changing strategic decisions based on this aid may pose for some companies. As she explains, the strategy has already been designed after having "analysed which are the projects that should be promoted", so the aid should only be focused on "accelerating these projects". "Changing or investing in projects that you had not identified previously will definitely not give the expected result" Leal warns.
Regarding the importance of technology within the CFO's strategy, according to Celia Leal, the pandemic "has shown that, if you are not digital, you might as well pack up now because you are not going to survive".
She says that it is not that digitisation has become an objective, "it is a necessity".
something that cannot be limited to just committing to having an online presence. Rather, "a hybrid approach" is needed, since there will be times when the customer considers it appropriate to interact with your company "face-to-face".
In summary, for Celia Leal the keys factors that differentiate a good CFO are, apart from technical knowledge, being "passionate about the role", having the ability to "analyse the entire composition of the company to create an overall vision" and, finally, empathy, because in her opinion "without empathy you get nowhere". Because "the truth is that sometimes you have to say that funds are not available" Leal says.
