Euler Hermes Trade Talk: Financial Leadership in 2021 and Beyond 

Andrew Gertz: Hi everyone. This is Andrew Gertz, Digital Marketing Manager for Euler Hermes. And I'm excited to be your host for this edition of Trade Talk. To set the stage for today, a variety of surveys, including our own Risky Business survey, have found that the job for CFOs and other financial leaders isn't getting any easier. Between cash flow issues, the economic crisis that we're all going through and a lot of other things on CFOs’ plates, there are a lot of challenges ahead. 

So today we're going to be talking about what does financial leadership look like in 2021 and beyond. To help us with that, we have with us a very special guest, Louise Jordan. She is our Chief Financial and Administrative Officer here at Euler Hermes. Louise, thank you for joining us. How are you doing today?

Louise Jordan: I'm doing great, Andrew. Thank you so much for having me.

Andrew Gertz: Louise, in Euler Hermes’ Risky Business survey, we found that one in three respondents said that they had to make significant business model changes as a result of the things going on right now. So if you're a CFO, a financial leader like yourself, and you're looking at a daunting task like that, where do you start?

Louise Jordan: Well, I guess in my experience and really just kind of speaking from the gut, I think you have to start with your customers. You know, I think everything that you do really should be driven around what your customer model is, what your customer base is, what your product is. And I think that's something that you have to keep at the forefront of all of your decisions. I mean, it's easier said than done. Clearly, a lot of companies have had to make very significant changes to their models. But I think as the best case starting point, you can keep the focus of the customer in mind. And from that, you branch out to your leadership decisions and foundational changes. Whatever you need to do, keep the customer at the forefront. So I would say kind of just as a starting point, that's probably the most important thing to do.

Andrew Gertz: We also know, looking at cash flow, a lot of disruption has happened as a result of COVID-19. Any tips for financial leaders out there that are specifically dealing with that issue of trying to improve cash flow during this time of recovery?

Louise Jordan: Yeah, that's a very, very difficult one. I am definitely somebody who is very much driven by data and information. A lot of CFOs are. And probably not a huge surprise there. And I think that you don't take your eye off of the discipline around doing your cash flow forecast. So whether it's the folks in your finance, your treasury, your investments departments -- whoever it is -- make sure that they are staying disciplined around doing those cash flow projections. You have a model; use it, improve it. Don't stop that discipline. You need to look forward at least six month. And you need to really keep that at the forefront because it will allow you to take actions if you've got that data and that rich information in front of you.

So whatever action you're going to take – whether it's banking, whether it's trade credit insurance, whether it's a loan – whatever it is, make sure that you're doing those cash flow forecasts. Look at both sides of your balance sheet, make sure that your assets and your liabilities, your duration, are matched and then make your decisions based on the information that you've got available to you and at hand. Just keep looking at it, aiding it. Don’t stop. 

Andrew Gertz: That makes a lot of sense. We have to be data-driven in these times. Going along with that, another thing that always seems interesting to me whenever we do these surveys is that we see this picture of financial leaders stuck between a rock and a hard place, so to speak. So, as an example, 45% of respondents in our survey said that they felt they needed to be more restrictive when they were offering terms to their customers. At the same time, about 80% said that they lost revenue as a result of being too conservative with payment terms. So from your perspective, how do you walk that fine line of being cautious, but not so cautious that it hinders future growth?

Louise Jordan: Yeah, I think this is this is a very difficult one. I mean, clearly you need to watch, and you need to monitor the key KPIs of your business. I think when you're talking about how to balance taking too much risk versus not taking enough risk, you really need to look at your leading indicators.

I think that you have to keep the KPIs in mind. I think you have to have really good communication amongst the leadership team of your company as well. And if I just look at my own situation, I'm the CFO, I just want to save money all the time. [Laughs] It doesn't get easy. You can't get there though by constantly cutting. So there's gotta be a balance, you know. So in my case, I'm trying to make informed decisions, taking into consideration the different aspects of the business – whether it's the flow of the claims or whether it's the production of new business or whether it's trying to save money on expenses.

You really have to look at it holistically. And you've got to talk to your peers and your colleagues and try to take all the different elements into account. And then you have to make a decision. I mean, it's not easy and they're not all going to be right, but make the darn decision and then you can adjust as you go forward.

Andrew Gertz: Yeah. And I think that's something we all struggle with no matter our function, but I'm sure, especially at the executive level — trying to make a decision with all this uncertainty, it can't be easy. Speaking about this time of uncertainty, when we look at 2021, speaking for myself, I know I entered this year hoping that this is going to be a turnaround year and that we're going to see things improve from 2020. When you see business trends, when you look at just the world outside of our doors, are you seeing things that you think should make CFOs more optimistic about the future? How are you feeling about 2021 compared to last year?

Louise Jordan: Oh, much better. I don't think it can get any worse. That's for sure. [Laughs] Yeah, no, I'm definitely feeling optimistic about 2021.

I mean, 2020 was very difficult and I think that the businesses that were able to navigate their way through 2020 and survive, they're stronger and they have a certain tenacity and a certain ability to power through. They can be flexible, make decisions, be creative, be entrepreneurial. I think there are so many businesses out there that came up with just some unbelievably creative ways of making it work. Whether it was really making some radical changes in their business model or whether it was just figuring out how to protect their customer base and their employee base while they were watching their their revenues shrink.

Companies dealt with these things in different ways. And so I really do believe that those companies, regardless of what they were dealing with, are stronger now.

I think that we have signs now that things are looking a little bit up. I don't want to jinx anything, but I think that we are seeing a little bit of positive trends with the coronavirus, with KPIs that we watch so carefully.

I think we're gonna start to see some traction on the vaccine rolling out. I think, just reflecting personally, the fact that I know a person who's already had their first shot it's like, “Okay, we're going to get there and we're going to see some improvement. We're going to start to see people get back out there and you know going to restaurants or making purchases and really getting that economic wheel turning again.

Andrew Gertz: Yeah. Well said, and I hope so. All of us are knocking on wood, I'm sure. So on that topic of looking ahead: how do you see the role of a CFO or financial leader in general evolving in the long-term?

Louise Jordan: Well, I think that going through a crisis of this proportion, I guess I'm not sure that the role evolves to something that is totally different from what it is now. But I think it certainly reminds you that you have to look at all the different components and kind of like you were saying earlier, you've got to balance the risk with the reward. You need to make sure that your decision-making is not too risky or not risky enough.

When you are going through a crisis and it's having a significant impact on your financial position, I think that you really get kind of a heightened awareness as to the importance of looking at your capital or your surplus position keeping that eye on your balance sheet, where in any other normal year, you're really focused on the P&L, you're really focused on your performance versus budget or versus prior year growth, whatever it is, production, et cetera.

But I think that it really forces you to take into consideration all those important elements and find a way to balance. How can we keep doing business in an especially regulated industry with the capitalization levels that we're required to have? How can we protect our employee base? What steps, what measures can we take in order to preserve our employee base?

Maybe companies can't be as generous as they were in the past when they were making lots of money. But at the same time, we want to make sure that we're doing everything that we can to protect the employees and start growing again with those fantastic employees. You have to work together as a leadership team going through a really significant time of difficulty and make decisions together so that you’re doing the right things for the company, and so you're not overly focused on one element of the business versus another element of the business. Those are some of the things that do come from going through such a crisis.

Andrew Gertz: One of the things that stuck out to me about your answer there was that you mentioned was employee wellbeing. That was one of the things that also struck me about this most recent survey. In years past, when we asked, “Hey, what's your top priority?” The top answer was something around growth usually. And not too surprising, but this year, the CFOs and the financial leaders we were talking to, they all said workplace safety was the top priority, both short-term and long-term. You touched on that a little bit, but could you talk a little bit more about how CFOs approach that element of empowering the workforce and employee wellbeing?

Louise Jordan: Yep. And it's a great question. And it's something that is so important to our employees now. Because I mean, well, when everybody is working from home, they feel very safe. However, when they return to the office, we still need those employees to feel safe and to feel protected. 

And so I think companies have a tremendous responsibility right now to make sure that when their employees do return to the office, I think they just need to feel that their wellbeing is taken very seriously. That’s having an abundance of the personal protective equipment available, or it's having signage – reminding people to wipe down the surfaces after they use them – or even restricting certain places in the office so that you don't have 10 copiers in use, you just have two copiers in use so you can really control the fingerprints and all of that.

I think it's one of those things where you really have to let employees know that you're taking it very, very seriously.

But I think in if you're disciplined, if you're diligent, if you have a plan, if you really demonstrate to your employees that you've thought about it and you've taken it very seriously before they return, and they can really see it, then I think that will go a long way, and that will mean a lot.

Andrew Gertz: There's a lot to be said for all the little changes you have to make in order to get that big change that has an impact. So I think the printer example that you gave, for example, that's something that I don't think any of us ever really think about, but it can have a really important change. All those little things add up. 

Andrew Gertz: I think a good place for us maybe to wrap up our conversation today is on this topic of adaptability. I'm always impressed by companies that can adapt – things like seeing small liquor manufactures transition to making hand sanitizer. Things like that can have an impact in the community, but it can also have an impact for the good of the business. As an executive, as a leader, what are your closing thoughts here on adaptability? How do you make sure that you're not just weathering this current storm, but if – you can – that your business is ready for whatever the next major shift is?

Louise Jordan: Yeah, I think that really some of the things that companies are doing so well right now is figuring out how to adapt their structures to weather the storm. And I think we see that in the fact that companies have allowed or enabled the employee base to work from home very quickly, very seamlessly in many, many cases; the fact that they have adapted their business models; the fact that they've adapted their ways of communicating and their ways of making decisions.

So where maybe teams used to meet once a month, now they meet two times a week, to make sure that they are keeping in very close contact with each other. Whether it's at an executive leadership level or whether it's at a team-working level, I think companies have shown a tremendous amount of adaptability already. And I think that that will really carry them into the future -- whether it's the way a company works together and the way they communicate, or the products that they develop.

Andrew Gertz: Yeah. Yeah. It's one of the few, I guess, silver linings of this, is seeing how adaptable everybody can be and that, you know when you put your mind to it, you can come together and make change. So I think with that, we can kind of stop there and, Louise, I want to take the opportunity just to thank you for giving us so much of your time and giving us such an excellent insight into the perspective of a financial leadership today. It's very valuable for us. So I thank you very much.

Louise Jordan: Thanks so much. I had a great time.