CFOs need new playbook in uncertain times: William Buck
Heightened debt costs, interest rates and ATO scrutiny should prompt financial leaders to act proactively and consider unorthodox strategies.
CFOs must take a proactive role in steering their organisations through economic uncertainty, focusing on early signs of financial distress and using strategies beyond merely “balancing the books”, according to William Buck.
Business advisory partner James Fox and restructuring manager Michelle Viscardi said high interest rates, rising debt costs and the ATO’s stricter stance on payment plans and lodgment extensions all raised the stakes for CFOs.
“With rising debt costs and unpredictable market dynamics, ensuring liquidity and stability requires more than just balancing the books – it demands foresight, agility and a proactive approach to financial controls,” they wrote in a recent article on William Buck’s website.
“Delaying action not only reduces recovery options but also heightens risks such as insolvent trading claims and personal liability for directors.”
They highlighted several key indicators of financial distress that CFOs should monitor closely, including declining revenues, shrinking profit margins, rising debt levels and liquidity challenges.
Persistent cash flow disruptions and missed debt obligations were often precursors to significant financial strain, they said, stressing the importance of early intervention.
“Understanding the early signs of financial distress is critical for taking timely action,” Fox and Viscardi said.
“Even minor cash flow disruptions can quickly escalate into significant challenges. Delayed receivables, growing debt or unforeseen market shocks can erode liquidity and jeopardise your organisation’s resilience.”
“By tightening controls and anticipating potential risks, you can safeguard business continuity and position your organisation for sustainable growth.”
But CFOs also had to “look beyond traditional cost-cutting methods” to drive growth, they said.
To that end, they recommended automating repetitive tasks, streamlining supply chain management with advanced inventory and tracking tools, and adopting energy-efficient practices.
On the financial side, CFOs should look to improve their cash flow forecasting, with advanced models able to create more accurate cash flow forecasts.
They should also understand and optimise the cash conversion cycle and renegotiate debt terms where possible to maintain flexibility and stability, the pair said.
For businesses facing severe financial strain, Fox and Viscardi said options such as small business restructuring (SBR) and safe harbour provisions were available to protect stakeholder interests.
SBR, they said, allowed SMEs with liabilities under $1 million to present a structured repayment plan to creditors over three years.
“SBR serves as a practical alternative to more formal insolvency options, such as liquidation or voluntary administration, offering a cost-effective solution that often results in better outcomes for all creditors compared to liquidation.”
Safe harbour provisions, meanwhile, gave directors of larger businesses protection from personal liability during turnaround efforts, provided strict criteria – such as up-to-date tax reporting and employee entitlements – were met.
“Understanding the indicators of financial distress will allow business owners and stakeholders to respond proactively to challenges,” they said.
“CFOs can position their organisations for success even in uncertain economic climates.”
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