Bank risk has entered the building — creating a new normal for CFOs.
In light of last month’s banking collapses, avoiding single points of failure has shot up the priority list for finance leaders across industries.
“We’ve been really focused on controlling what we can control, while being as nimble as possible in operating our business,” Nellie Vail, chief financial officer at payments orchestration platform Spreedly, told PYMNTS during a conversation for “PYMNTS CFO Series: What’s Different?”
The “new norm,” Vail says, is having multiple banking relationships, diversifying your cash, and establishing a “really solid” cash management strategy.
While noting that treasury management more broadly would have been lower on her totem pole just a few months ago, Vail emphasized that, in light of recent events, it has never been more critical to look forward while thinking about liquidity and being a partner to grow the business in a way that is financially responsible.
That’s because last month’s bank collapses and ongoing economic contractions are increasingly evolving the way finance leaders take stock of how their banking relationships and cash diversification strategies can impact growth.
The next step, Vail said, is having a “very prescriptive” cash strategy to go forward on.
“It looks different from company to company depending on the level of cash they’re operating with,” she added, “but in the future — it will be more prescriptive.”
A lot of the direction finance leaders can give their organization depends on where individual business priorities lie, but Vail said that the current situation is one where companies should stress “getting back to basics, one hundred percent back to basics.”
“[I find myself] doing cost containment, and the thinking is — shouldn’t we be doing this all the time? There’s a great opportunity here to take advantage of or capitalize on this time to shift company culture to being a more fiscally responsible company,” Vail said.
She added that while it may not be as fun as a growth at all costs approach, she is leaning into the opportunities to refocus and strengthen core operational fundamentals the current macro environment brings with it.
“It is so important to always remain nimble and capitalize on whatever the macro environment hands you — it is something that you can’t control, but that you can often manage to, being able to capitalize when it’s a growth environment and then capitalizing too when that environment shifts,” Vail said.
See also: CFOs Look Back on 2022 as the Year of Digital Transformation
In challenging economic environments, having a transparent, high-level view of operations is crucial for CFOs as they engage with other organizational leaders and align on strategic imperatives including where to continue to invest, where to pull back spending, and how to leverage modern technology to provide an optimal return on investment (ROI).
“A lot of companies are in a phase where maybe they built a budget that’s already outdated because of what happened so drastically in the last couple months,” Vail said.
One thing that’s critical, she noted, is making sure that company targets are recalibrated to this new normal — that finance is aligned with sales, that forecasting is accurate from a product perspective.
“I’m looking at all of our software spending and asking if we are getting the value that we are paying for, asking where does this fit in the bucket of nice to have versus need to have, and making sure that our first focus is on providing value to our customers,” Vail said.
She added that she has been “really leaning into” Spreedly’s board and investor relationships to take advantage of the broader view they have across multiple companies.
“Figuring out how we can all learn from each other by sharing experiences” is crucial, Vail said.
As for what she is looking forward to, “I think we are recalibrating into a new, more healthy normal,” Vail said. “It is good to have relationships with your vendors, it is good to be aligned on your own strategy and make sure that it is serving a sustainable purpose, and it’s important to educate your customers to ensure alignment there — that they know how we are helping them both save money and accomplish their goals.”