Navigating the storm  

Author: Kamolwan Chunhagsikarn
Partner | Financial Advisory

Economic headwinds howl across the globe, casting a long shadow over Thailand's recovery. Tourism, once a bustling artery, sputtered last year, welcoming only 28 million visitors compared to pre-pandemic highs. Household debt sits heavy at 86% of GDP, and China's tourist wave has receded, leaving a 3.5 million trickle in place of the pre-pandemic 11 million. With government stimulus injects like the tax deduction program offering a flickering lifeline, Thai CFOs find themselves at the helm, charting a course for their organisations through this turbulent sea. In this role, they are not merely bean counters, but strategic captains, wielding financial insights and deft leadership to navigate the choppy waters of uncertainty.

In this challenging climate, CFOs play a pivotal role in steering organisations toward long-term success, employing five key strategies for stability.

Optimise cash flow and liquidity management: In times of economic uncertainty, managing cash flow becomes paramount. Thai CFOs should focus on optimising liquidity levels, implementing tight expense controls, and exploring creative financing options. Building a robust cash flow forecasting model and proactively managing working capital will be key to overcoming fluctuations in revenue and spending. It will also be critical for finance executives to monitor consumer demand shifts to stay ahead of and adapt to strategic shifts in the market.

Embrace agility and scenario planning: The days of rigid five-year plans are over. Scenario planning can help Thai CFOs anticipate potential roadblocks and formulate strategic plans. By identifying risks that may arise from unpredictable economic landscapes, CFOs can develop more thorough and accurate risk mitigation strategies for the organisation. Flexibility is essential in financial strategy, requiring CFOs to ensure the organisation can adapt swiftly to a multitude of unanticipated forces. The ability to adjust to the pace of change by harnessing tools and processes that boost flexibility will enhance the finance function's performance. A streamlined, adaptable finance function can enable an enterprise to capitalise on disruption-generated opportunities, helping their business to stay ahead of the curve.

Champion a culture of collaboration and communication: Silos have no place in today's turbulent environment. A comprehensive range of pressures is increasing demand for support from the CFOs and their teams, who often operate within limited resources. CFOs will need to assess and improve coordination and alignment within their function to establish a responsive finance function with the necessary capabilities to adapt to the evolving needs of the organisation. This also entails promoting collaboration across the business and a keen understanding of the organisation’s data strategy, talent model and technology infrastructure required to serve the business and the changing environment.

Foster technology-driven finance function: Technology is no longer a luxury, but a necessity. Its utilisation is vital for enhancing the financial management and decision-making process. CFOs can collaborate closely with CIOs to pinpoint the technology priorities of the finance function. Tools such as data and predictive analytics as well as AI can, prove invaluable for swiftly analysing large amounts of financial data, and identifying trends, and pinpointing potential risks that need to be addressed. Other technologies, such as RPA, allow CFOs to standardise and automate many of their existing processes, thereby enabling the team to focus on higher-value strategic tasks.

Build trust and transparency with stakeholders: The stakeholder landscape for CFOs has also evolved. Internally, boards now expect finance to play a leading role in due diligence, successful M&A activity and creating sustainable alliances. Externally, investors and the public demand transparent and clear communication around the organisation's financial management. Building trust and confidence through open and timely updates, including ESG considerations, is crucial for attracting investment and navigating stakeholder management.

In the face of volatility and change, CFOs must be both proactive and reactive enablers of enterprise strategy, necessitating swift action. The ability to pivot quickly, provide timely insights, test hypotheses, plan scenarios, and reduce reporting cycle times will ultimately drive business performance. Adopting a holistic approach that combines foresight, strategic planning and effective communication across stakeholders is beneficial in navigating challenges and positioning the organisation for long-term success, particularly in volatile economic environments.

By embracing these five strategies, Thai CFOs can transform from bean counters to strategic captains, leveraging their leadership, agility, and proficiency in technology and data. This transformation guides their organisations through the current economic storm and positions them for a brighter future amidst the choppy waters of uncertainty.