The good news, says Eldridge, is if the definition of a controller left on this shore is an analyst, that’s a good job. “Companies need to pay attention to the financial planning and analysis function,” he says. “That’s a great spot for finance people, and a great spot to rotate in and out of in terms of developing more skills.” For finance folks whose experience is primarily in controller-type work, he says, FP&A represents an opportunity to develop a more attractive resume in case the worst does happen.
Already one of the leanest departments in corporate finance, it’s hard to believe that treasury could come in for cutbacks. Indeed, if a recession becomes a reality, much of the responsibility of dealing with it will fall on the shoulders of corporate treasurers. Sometimes dubbed “chief liquidity officers,” they’ll have to figure out what to do when the liquidity runs dry.
These are days when treasurers should be reading the tea leaves of their companies’ working capital, accounts receivable, accounts payable, and inventory days, says Jeffrey Wallace, managing partner of Greenwich Treasury Advisors. “You want to start seeing how accounts receivables days are trending,” Wallace says. “You must forecast cash flows better, so you have funds available to meet a slow down.”
Wallace recommends stress-testing cash flow figures and debt outstanding in the event of a drop in sales or delays in payments. Also, he says, keeping a close watch on covenant limits and communicating with banks and creditors is crucial. “You don’t want banks to think you’re not managing your business right,” he says.
That’s good advice for keeping the business running. To keep their own paychecks coming, the most important move for treasurers is to keep their CFOs informed. If recession pains are affecting the business, Wallace suggests, the treasurer should recommend delaying capital expenditures, delaying research and development, and suggesting that advertising be cut. As with controllers-turned-analysts, that sort of advice is likely to help a treasurer or treasury employee be viewed as a strategic partner at a time when very few employees are needed to run the business. “Treasury needs very talented people, but you can put a few of them in one location and essentially they can run a global operation,” notes Hackett’s Hall.
Of course, the potential losses of an economic downturn also come with opportunity. “The entire job is going to become very sexy again, and more stressful,” says Jeff Glenzer, managing director of product development at the Association for Financial Professionals. “In a recession, cash is suddenly a very attractive asset.”
And what about CFOs themselves? Eldridge says that it’s common for companies to change CFOs during changes in their business cycle — when they go public, for example. Thus, he says, job changes are also common when the larger business cycle turns. For example, a CFO of a smaller growth company may decide to leave if recession forces the company to adopt a defensive economic approach.
But ultimately, CFOs occupy such a volatile position that an economic recession may simply be a moot point. “If the plan is not being met, the CEO is not going to take himself out — the CFO will go first,” says Eldridge. And CFOs can’t really win: When CEOs do end up leaving, their successors tend to bring their own CFOs with them. The CFO slot, says Eldridge, “is just a battlezone. You’re going to score a touchdown or get sacked.”
That may sound grim, but Eldridge is bullish on finance positions in a recession. One might think, of course, that turnover would benefit an executive recruiter one way or the other. But that’s not so, says Eldridge. Five years ago, he says, financial services hiring “came to a screeching halt. We have not seen that in finance.”
He recommends that finance professionals continue to seek ways to balance their skill-set. “Don’t get pigeon-holed. You want to be the value-add person.” He says finance professionals can do that by working with senior management on special projects, volunteering for assignments overseas or within operating units and taking other steps that demonstrate that they are more than just a number-cruncher. “You don’t want to be easily disposable,” he says.
In the long run, says Eldridge, finance talent is like healthcare: everyone needs it. “I would have to lean towards finance perhaps being recession-proof,” he says. “But that doesn’t mean everybody stays in their job.”
This story contains additional reporting by Alan Rappeport, David McCann, and Marie Leone.