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Exclusive: 7 financial predictions for SaaS CFOs over the next 12 months

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7 financial predictions for SaaS CFOs over the next 12 months

#financial #predictions #SaaS #CFOs #months

As a CFO at a Software as a Service (SaaS) business, there’s probably no better time than to revisit your company’s financial plans and set some new ones for the future, perhaps with an added dash of inflationary uncertainty.

What will the next 12 months look like for your business? What sort of trends do you need to be aware of?

What predictions will bring a smile to your face? What will drive a tingling of nervousness?

Researching what’s to come may help you plan and manage budgets and forecasts with optimism.

In this article, we highlight seven financial predictions that CFOs at SaaS businesses should consider, plus tips on what you can do to manage or take advantage of what’s to come.

Here’s what we cover:

1. Volatility and uncertainty will create opportunities for efficiency and growth

Whether it’s Brexit, trade disputes or war, world events can be severe challenges. If you build agility into your business, you have a greater chance of responding to changes.

Have a hard look at your business and work with the leadership team to pivot if necessary, which might require you to innovate and invest in digital transformation.

You could invest in automation, for example, and position your business to take advantage of market opportunities, such as acquisitions.

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Look at automating payments and the accounts receivables process, too. It’s relatively simple and can yield significant savings.

Post-pandemic, it may have become more difficult for your business to employ the right people due to skills shortages and fewer European Union workers. It may be time to automate and digitalise essential functions in response to this talent shortage and avoid productivity gaps.

But remember that people are your most important resource.

Make sure they feel safe, supported and valued, no matter what’s going on in the world.

2. Digital networks will power the future of accounting

Accelerated by the pandemic, cloud and SaaS will continue to be critical drivers of innovation across all industries.

According to Aaron Harris, global chief technology officer at Sage, digital networks will comprise the next stage of technological advancement.

He believes digital networks are the new enabling architecture.

Aaron says: “You design SaaS for everyone in the business; you design digital networks for everyone in the business ecosystem.

“In SaaS, customers share computing resources; people share data and activity in digital networks.”

3. A greater focus on reporting will be required

Data and analytics will increasingly drive tomorrow’s companies.

As a CFO, you’ll have to use technological resources to provide real-time analysis of your company’s finances.

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Communication skills will become more critical, so you can help shareholders and executives understand your action plans.

We’re shifting from quarterly or weekly reports to on-demand, where business data is readily accessible from a cloud-based system.

You’ll have to adjust to new practices surrounding the tracking and management of this financial data.

4. Converging data and analytics platforms will be a priority

Although data and analytics may have become a bigger priority for you over the past few years, you may have invested in a piecemeal fashion.

Often, finance teams adopt individual tools and systems that are incompatible. This leaves analytics capabilities siloed, making it more difficult to create comprehensive analysis to inform effective decision-making.

In the future, you’ll need to look at analytics, business intelligence and data science software less as individual tools.

Instead, visualise an ecosystem linking data analytics investments, practices, processes and critical business outcomes.

If data and analytics mature in this way, you can take advantage of greater resilience and have a more significant competitive advantage.

However, to capture these opportunities, you must tackle the fragmented state of your data and analytics networks.

To ensure a constructive convergence of analytics tools and governance, you’ll need to:

  • Expand analytical capabilities, roles and processes
  • Anticipate changes in products and practices
  • Plan for a convergence of data and analytics platforms and support collaboration across the business.

5. The pandemic recovery will offer more opportunities for IPOs

Many businesses are well along their journey to recovery after the pandemic turned the UK economy upside down.

You may be able to get more funding in the market as investors seek new, exciting ventures to support.

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With capital available to businesses, more finance teams will begin to prepare for initial public offerings (IPOs)—and we’ll see a wave of public companies emerging as we recover from the economic downturn.

As a result, rather than navigating unknown territories in search of recovery, companies will be navigating the exciting pathway to IPO and seeking solutions to inform the nuanced strategy required for such a huge milestone—especially from an accounting perspective.

Mike Whitmire, co-founder and CEO of software company FloQast, says: “It’s easy to overlook the back-office work that needs to take place before an IPO because it’s not nearly as cool as ringing the bell.

“That leaves businesses vulnerable.

“Whether it’s instituting complex internal controls to support compliance, instituting a formalised financial reporting process, or ensuring a scalable effort for ensuring audit readiness—both pre- and post-IPO accounting teams will have a lot on their plates.

“The chances are that many companies don’t have the experience or skill set to go public and face a tough market for hiring talent.”

It would help if you understood that technology is the common thread that will impact the ability of your business to prepare for an IPO and successfully meet the demands of being a public company.

Mike adds: “At the end of the day, the IPO event itself is a small component—it’s what comes after you ring that bell that matters.”

Mike believes that from reporting, financial planning and analysis to cybersecurity, companies that go public will double down on technology resources to be efficient, run business, and give their accountants more time back

Newly public companies don’t want to blow up due to increased demands.

6. Accounts receivable and accounts payable will have to harmonise

Accounts receivable (AR) refers to outstanding invoices and money that customers owe you, while accounts payable (AP) concerns the outstanding bills you owe, typically to vendors and suppliers.

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AR covers assets, while AP deals with liabilities, and financial teams tend to treat them as separate accounting functions.

Dan DeVall, VP of business development at spend management company Airbase, says: “Collecting revenue and purchasing from suppliers has historically been viewed as distinctly separate activities and workflows.

“It’s been a tug of war between these two departments with opposite incentives; collect money owed faster or delay payments due slower.”

Finance is changing, which means that this thinking is rapidly becoming a thing of the past. Increasingly, businesses realise the benefits of operating revenue collection and supplier purchasing in harmony.

Dan says: “We must operate collaboratively to understand the value of money within the network.

“The give-and-take relationship between AR and AP is now possible and quantifiable.

“The sooner buyers and suppliers learn to harmonise and articulate the value created between them, the sooner both departments may gain efficiencies and optimise their key performance indicators [KPIs].”

7. Consolidation of credit cards will happen

No, it’s not about consolidating credit debt.

This is about businesses sticking to one credit card type rather than mixing and matching cards depending on department and need.

Often, businesses hand out corporate credit cards depending on the department, employee, or purchasing type.

That’s changing.

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Specific credit cards for travel and expenses, executives, department purchases, and one-off transactions, each managed by a different issuing card provider, are giving way to one card programmes.

Modern cards are software-enabled, which means you can automate workflows by which transactions are approved, captured, and reconciled.

Over the next 12 months, we could see more businesses roll out one software-enabled card programme, with a platform for all employees to interact with and manage these transactions.

Final thoughts: Review your plans and change course if required

Although you may have to sign off on final decisions, you need to speak to people across the business and understand what’s coming up in the future.

Managing your SaaS finances should be an ongoing and flexible process, so don’t put your financial planning in a folder.

Always make time to get away from fighting fires—assess your progress, see where you’re heading, and change course if necessary.

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Exclusive: 3 Home Improvement Stocks That Can Renovate Your Portfolio – TalkOfNews.com

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3 Home Improvement Stocks That Can Renovate Your Portfolio

#Home #Improvement #Stocks #Renovate #Portfolio

During a bear market, home improvement stocks have historically been solid defensive plays

The housing sector is slowing down. Rising mortgage rates are having the predictable effect of cooling down demand.



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Or are they? While homeowners may not be able to get the same premium they could command just one year ago, there is still an ample supply of homes on the market. And once these homes change hands, new homeowners will be ready to make their new house their own.

However, that’s not the only catalyst for home improvement stocks. Homeowners who are deciding to “love it” rather than “list it” are likely to put some money into one of their largest investments as they wait for the housing pendulum to swing back in their favor.

In this article, I’ll give you three home improvement companies that continue to generate strong revenue and earnings. And two of these companies are also members of the exclusive Dividend Aristocrat club. These are companies that have increased their dividend for at least 25 consecutive years.

If that’s the kind of balance of growth and income that appeals to you, it may be time for you to consider these three home improvement stocks.

Lowe’s (LOW)

Lowe’s (NYSE: LOW) stock is down about 30% in 2022. That’s larger than the broader market. But in the last month, the stock is showing signs of forming a bottom. And with the stock near its 52-week low, it may be time for investors to take a closer look at the stock.

The driving force for that sentiment may be the company’s earnings. In May, Lowe’s closed out its fiscal year. Revenue growth came in at an uninspiring 1% growth. But earnings were up 19%. Even if companies are heading into an earnings recession, a P/E ratio that is slightly below the sector average means it’s likely that Lowe’s will be able to post growth, albeit perhaps slower growth, in its next fiscal year.

And Lowe’s offers investors a rock-solid dividend that it has increased in each of the last 48 years. The current payout is $3.20 per share on an annual basis, and the company has averaged 17% dividend growth over the past three years.

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Home Depot (HD)

Just as investors can debate Coca-Cola (NYSE: KO) versus Pepsi (NASDAQ: PEP) among consumer discretionary stocks, they can frequently plant their flag with Lowe’s or Home Depot (NYSE: HD) when it comes to home improvement stocks.

To be fair, neither of these stocks looks like a bad selection for investors who are concerned about a recession. Home Depot delivered a strong earnings report in May 2022. Revenue was up 3.8% and earnings per share were up 5.8%. The company delivered strong same-store sales growth that was due in large part to its relationship with professional contractors.

Of the three stocks in this article, Home Depot has the largest dividend yield (2.68%) as well as the largest payout ($7.60). And while it’s not a dividend aristocrat the company has increased its dividend in each of the last 14 years.

Sherwin Williams (SHW)

Paint is one of the most cost-effective ways to give a house a refreshing update. And as we move into the fall, homeowners attention turns to finding that perfect swatch of paint to transform a room. That’s enough to put Sherwin-Williams (NYSE: SHW) on my radar and perhaps yours as well. Historically the current quarter and the following quarter are the company’s strongest in terms of revenue.

But the skeptics will point to the fact that earnings have been a mixed bag. The company has missed analysts’ expectations in two of last four quarters and in the other two the gains were on the tepid side. And I’ll concede that a mixed earnings outlook will probably bring current price targets down from their 30% upside.

That being said, SHW stock offers both growth and income which is appealing in this volatile market. Sherwin Williams dividend yield of 1% isn’t likely to make income investors swoon. But the company does payout $2.40 on an annualized basis. The company also sports a three-year dividend growth of 24.26% and has increased its dividend in each of the last 44 years.

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Exclusive: VW and Goldman-backed battery maker Northvolt gets $1.1 billion funding injection – TalkOfNews.com

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VW and Goldman-backed battery maker Northvolt gets $1.1 billion funding injection

#Goldmanbacked #battery #maker #Northvolt #billion #funding #injection

Northvolt’s most recent funding announcement comes at a time when major economies are laying out plans to move away from vehicles that use diesel and gasoline.

Mikael Sjoberg | Bloomberg | Getty Images

Electric vehicle battery maker Northvolt on Tuesday announced a $1.1 billion funding boost, with a range of investors — including Volkswagen and Goldman Sachs Asset Management — taking part in the capital raise.

In a statement, Sweden-based Northvolt said the $1.1 billion convertible note would be used to finance the company’s “expansion of battery cell and cathode material production in Europe to support the rapidly expanding demand for batteries.”

Other investors in the raise include Baillie Gifford, Swedbank Robur, PCS Holding and TM Capital.

Northvolt recently said its first gigafactory, Northvolt Ett, had started commercial deliveries to European customers. The firm says it has orders amounting to $55 billion from businesses such as Volvo Cars, BMW, and Volkswagen.

Gigafactories are facilities that produce batteries for electric vehicles on a large scale. Tesla CEO Elon Musk has been widely credited as coining the term.

Read more about electric vehicles from CNBC Pro

Northvolt’s most recent funding announcement comes at a time when major European economies are laying out plans to move away from road-based vehicles that use diesel and gasoline.

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The U.K., for instance, wants to stop the sale of new diesel and gasoline cars and vans by 2030. It will require, from 2035, all new cars and vans to have zero-tailpipe emissions. The European Union — which the U.K. left on Jan. 31, 2020 — is pursuing similar targets.

As the number of electric vehicles on our roads increases, the competition to develop factories capable of manufacturing EV batteries at scale is intensifying, with companies like Tesla and VW looking to establish a foothold in the sector.

In a statement issued Tuesday, Northvolt’s CEO and co-founder, Peter Carlsson — who previously worked for Tesla — was bullish about the future. 

“The combination of political decision making, customers committing even more firmly to the transition to electric vehicles, and a very rapid rise in consumer demand for cleaner products, has created a perfect storm for electrification,” he said.

According to the International Energy Agency, electric vehicle sales hit 6.6 million in 2021. In the first quarter of 2022, EV sales came to 2 million, a 75% increase compared to the first three months of 2021.

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Exclusive: Activating Purpose Inside One of America’s Largest Banks – TalkOfNews.com

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Activating Purpose Inside One of America’s Largest Banks

#Activating #Purpose #Americas #Largest #Banks

In 2022, Purpose has moved from the periphery of company strategy to its core. The Purpose Power Index 2022, the first empirical study of Purpose based brands, confirms that Purpose significantly contributes to increasing people’s willingness to buy from and work for a company. 

Despite this growing understanding, a big challenge remains. Only 10% of CMOs have activated their Purpose inside and outside their organizations (Kantar). And among those who do, recent studies indicate that 80-85% of Purpose initiatives fail in execution. 

So, who is doing it, and doing it well?

Vinoo Vijay is Chief Marketing Officer at Truist, one of the largest commercial banks in the nation. He also happens to be one of the top CMOs in the country who is activating the company’s purpose effectively. This interview puts Vijay at the center of activating purpose. He agreed to talk to me, and he relishes the opportunity to pass on what he has learned in the process. 

1.   What is Truist’s Purpose?

Our purpose is to inspire and build better lives and communities. This purpose has been our core grounding from the inception of Truist three years ago. It’s clear to us that scaled modern banking is just table stakes.  What drives us, and makes us distinctive, is our absolute commitment to our shared purpose, mission, and values. Our belief is that a reimagined combination of touch and technology, combined with our deep teammate, client and community focus, puts us on the path to live our purpose every day.

2.   When you were considering the offer to come to Truist and how did you know you’d be collaborating with leaders who believe in building a purpose-driven bank?

Your question includes an important and correct assumption. I had no interest in being the CMO of just another bank. I had already served as CMO at TD Bank, as well as created and ran brand and marketing at Ally Financial.  What was, and is, important to me is having an active and positive impact on colleagues and communities, and it was obvious as I spoke with Truist leaders that they were deeply driven by purpose. Even now, we center our work in purpose. It’s a constant reminder of our why.  And because we are a wholly new brand and reimagined bank, we have an incredible opportunity to translate our purpose intention into a genuinely different kind of banking experience.

3.   Knowing that Truist’s Purpose is larger than simply increasing the number of new checking accounts, why does it need a purpose?

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For the longest time the key focus and message of banking was around security. Imagine the imposing bank branch with six-inch thick walls protecting your money. That era was followed by one that emphasized scale. The sheer power of size. Think 60-story buildings. And for the last 15 years or so, the industry focus has been digital utility as digital became ubiquitous. Maximizing utility within our mobile six-inch screen. In the last couple of years, we are seeing a shift towards a focus on the communal. What I mean by that is, we’re recognizing that we don’t live in a vacuum. That we have shared experiences. And our actions impact others, and the actions of others impact ours. Think six degrees of separation multiplied. Our collective wellbeing is inexorably linked. This era demands that we find and create shared, common purpose beyond ourselves. In fact, we crave it. Whether as a teammate, or as a client. So the question now is not whether we need purpose, but how well can we deliver on purpose for our teammates, clients, and communities. Just as security, scale, or digital utility was the hallmark of our past, purpose is the blueprint for our future.

4.   Communicating that purpose must be challenging. In a new study, less than 25% of CMOs are not activating the company purpose; what’s been your strategy? 

Challenging, yes. Impossible, no. Activating purpose presented wide open whitespace for Truist. Banks do well meeting the functional banking needs of clients and communities. We get the functional job done. But the emotional needs. The more human needs. The needs that, if met, reinforce trust and commonalities. That inspire and build better lives and communities. Those needs aren’t typically being met by financial services providers. We knew that if we could find a way to both reinforce internally and, establish externally, our legitimate claim of being a more purposeful bank, we could stand apart. To your point, however, the language and visualization of purpose can lack believability and feel trite. It’s easy to be cynical about emotional attributes. Truist’s approach has been to go at it from the inside out starting with leadership. Our Truist Leadership Institute specializes in leadership development that focuses on the whole person and how their beliefs, especially their purpose, influence their leadership style. Leaders are tasked with not only identifying their purpose, but writing it down and leading from their personal purpose.

As we thought about how to translate our intention into an external narrative, we looked at language we already use internally. One of our key values is Care. Care is an encompassing word. It’s intentional. It’s focused on others. It alludes to a belief in and departure from industry indifference. It speaks to how we show up for teammates, clients, and communities.  So we leaned into that word, and framed our position that “When you start with Care, you get a different kind of bank.” And we believe that to be true.  Care can affect how people experience the brand.  And if we can apply the power of a safe, scaled, digitally capable bank – with Care – then we will create a different kind of bank. That promise is how we think about our strategy, our experience development, our teammate development, and a  vibrantly local community approach.

5.   Truist today is everywhere, on TV, on billboards, on social media, on sports stadiums, how important is it to build your brand?

We are a new brand. And our scale demands we are in the top 3-5 bank brands in terms of awareness and consideration. Given there are several industry brands that have close to 100% awareness, we have our work cut out for us. As we journey there, our approach is to lean into what makes us unique – our purpose, a relentless pursuit to activate our purpose through Care, our focus on human touch and technology, and our vibrantly local emphasis on community engagement. 

6.   It seems like the CMO function is undergoing change.  What do you see in the future of Marketing and the role of a CMO?

I’ve been in the marketing function for almost 30 years and have been head of marketing or CMO for more than a decade. The marketing function has gone through a couple of key evolutions and is going through one now. Thirty years ago, the big shift in marketing was enabled by the emergence of relational databases. That put marketers on the front end of direct marketing acquisition strategies.  The emergence of digital was the next transformational moment, driving marketers to become CRM and client experience champions. Now, I think the shift is toward deepened integration of brand and purpose. Marketers need to be the champions of purpose, always connecting the work to the deeper “why.”

7.   So when you’re sitting around the table with Bill Rogers, the CEO and Chairman of Truist, talking about strategy and what to do next, what keeps you centered? Do you think about the purpose on a daily basis? 

I do. My personal purpose is to elevate the power of care and joy in my daily life. For me that means using every interaction to exchange a little bit of care, a little bit of joy with whomever I am with. I find the more honest and authentic I am, the better my chances are of having interactions that result in successful exchanges of care and joy. At the end of the day our lives are made up of millions of individual moments. The more of those moments have heart and happiness, the more I think our life is one well lived.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.
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