Apart from financial reporting, controls, and fundraising (which are largely common across all types of businesses), it’s important for CFOs to have the ability to focus their energies on areas that matter the most to the business model of the company.
We compare the experiences of three CFOs we have had on our podcast on what they focus on based on the nature of the companies they are a part of.
(1) Managing costs and cash flows of a multi-business, multi-market platform
For a multinational used car ecosystem like Carro, a focus for their CFO has been to manage a complex operation with multiple business lines (with each their own operating drivers) across several markets (with each their own mix of Carro’s offerings).
As Ernest explains on our podcast: “…ensuring that the OPEX is lean and there is no duplication of costs in the various business segments. So the key point here is it’s incredibly important even in the finance function to build a very strong commercial understanding of building a lean business.
…watch the P&L’s cash flows and liquidity very carefully. There are businesses that will have higher ramp up costs and capital requirements, whilst some which are profitable from the beginning will require much more working capital at the start. They will take time to build financial track records that banks want to see before they consider lending at competitive rates.
For that matter equity shareholders will also want to see the upside. So this means I will have to watch like a hawk where the cash flow out is creating value or going to waste. Pacing and balancing growth versus capital allocation appropriately is critical to the survival of every startup.”
(2) Automating portfolio management for an ecommerce aggregator
For an ecommerce brand roll-up firm like Rainforest, post-acquisition management is key focus for the CFO to ensure that the money spent on acquisition translates into returns through the growth of the brands acquired. This means having a holistic view on their portfolio’s performance.
As Rainforest’s portfolio has grown to 16 brands (as of Q3 2023), the company has found it valuable to automate this visibility. In their case, this meant ERP integration.
As Jason shared on our podcast: “As the organization grows bigger and more complex, the need to automate becomes even more important…One of the major projects we have undertaken since late 2022 was the integration of ERP into Rainforest. It’s a monster of a task, as you can imagine, but I’m glad to share that we are at the tail end of the process. This will form a stronger platform for us, better from a finance and supply chain perspective, for us to operate our brands more optimally.”
(3) Ensuring healthy treasury operations for an SME lender
For a supply chain financing company like AwanTunai, treasury is key focus for the CFO as ensuring a healthy supply of lending capital is key to scaling their business. Sources of this capital will vary in terms of risk acceptance criteria, which the company has to take into consideration in its treasury management.
This means the CFO has to work closely with sales and risk teams to ensuring capital flows efficiently from fundraising through risk and sales processes, delivering the right margins for the business to scale healthily.
As Shilpa points out on our podcast: “For me, demand is not the issue. It’s the supply of lending capital, which can impede or scale the business.
So I work very closely with private credits and banks convincing them and negotiating with them on the terms of the credit. Obviously, lending is all about a game of margins. Trying to get the right margin so I can run a profitable, efficient business. That is something which takes up a lot of my time.
…Treasury can become very complex as asset allocation becomes complex with several lenders with different eligibility and risk acceptance criteria.”
More insights into the CFO role here
Paulo Joquiño is a writer and content producer for tech companies, and co-author of the book Navigating ASEANnovation. He is currently Editor of Insignia Business Review, the official publication of Insignia Ventures Partners, and senior content strategist for the venture capital firm, where he started right after graduation. As a university student, he took up multiple work opportunities in content and marketing for startups in Asia. These included interning as an associate at G3 Partners, a Seoul-based marketing agency for tech startups, running tech community engagements at coworking space and business community, ASPACE Philippines, and interning at workspace marketplace FlySpaces. He graduated with a BS Management Engineering at Ateneo de Manila University in 2019.