Savvy organizations are increasingly turning to the CFO office to drive operational resiliency across departments.
In the face of market conditions such as inflation, supply chain disruptions and frothy capital market volatility, the role of finance and accounting teams is expanding to oversee cross-departmental coordination and holistic business priority alignment to help businesses weather the macro headwinds.
PYMNTS sat down with Pluralsight Chief Financial Officer Michael Agresta to discuss what he sees as the benefits of finance teams’ expanded role and how an innately curious mindset helps drive profitability by aligning previously disparate business processes and better realizing long-term efficiencies.
“I would say, honestly, this has been one of the harder budget seasons I’ve gone through because of the level of unpredictability on top line, and then that introduces unpredictability into top line for next year as well,” Agresta tells PYMNTS, adding that the contemporary situation has resulted in an “extensive” amount of scenario planning for Pluralsight.
Striking a Balance Between Growth and Profitability
As CFO of a venture-owned, high-growth company, Agresta is responsible for managing a sizeable internal workforce and an external client base.
“It’s a substantial amount of work getting everyone aligned on strategy and expectations — from the board level to the director and VP levels,” he says. “Cash management is a big component, we’re trying to continue to drive efficiency and alignment on long-term strategic objectives from a financial standpoint, are we trying to be a high growth revenue company? Is our goal to be profitable?”
Agresta tells PYMNTS that the answer lies in balancing “growth from spend” to drive profitability over time. “It’s not just growth at all costs, which it was historically — where we would have assumed a revenue multiple. Now, we think we’re better off positioning ourselves as an EBITDA multiple over time – so thinking three, five years down the line, and now the whole spending mindset has to shift.”
The pandemic has shown that business disruptions can happen without warning and come from any direction, making it critical for business processes, particularly financial operations and payment functions, to be well-managed.
“With how the market changed it was a shift to get people to think about how profitability really does matter, and cash is critical – there are just so many strategic things you can do with a higher EBITDA or profitability, so we’ve been specifically working on trying to optimize working capital and increase cash flow, along with more bread-and-butter tactical financial planning and making sure our KPIs reflect these new goals.”
Curiosity Drives Alignment
As economic headwinds continue to blow and broader marketplace sentiment dampens, companies will have to pivot to focus on internal processes and back-office functions to wring out some new efficiencies and margin improvement.
“I think within finance you have to be very curious,” Agresta says, “you can’t just say ‘I think this is going to work,’ you have to consider what if it doesn’t, and you have to go through and consider all the things that make you believe it might, start pulling those strings and being constantly curious.”
The value of constantly running those thought experiments, as Agresta tells PYMNTS, is that it allows finance leaders to flag potential synergies between departmental goals, alert other executives to expected outcomes, and even highlight future roadmap pitfalls to be aware of.
“As for how I think the role is changing, it’s obviously not just about finance anymore — so much is now about communication and alignment, because my job is primarily to align strategies, first with the board of where we want to go, and separately to ensure our other executives are aligned on their departments’ KPIs and those mission-critical, long-term outcomes that ladder up to those strategies. Then, of course, everyone needs to be empowered to go out and execute against it, right? Twenty years ago, 30 years ago the job was probably more accounting, but now its really become strategic,” Agresta said. “It’s not, ‘hey, we’re just going to cut spend and do the same amount’ — that doesn’t work. If you have to cut spend, you have to then get narrower on what needs to be accomplished and by whom.”
PYMNTS has been closely tracking how transformative approaches to holistic business planning powered by digital tools are evolving the responsibilities of finance teams.
Agresta agrees, adding that the other piece of the CFO puzzle he sees as really changing is the amount of technology that everyone uses. “Within finance and accounting we’ve automated so many processes.”
As for what he sees the future holding? A lot more scenario planning and a lot more cross-team engagement.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More