For the post-pandemic world, put extra cash in IT

Many CFOs were already deep into transforming their financial operations when the pandemic hit in early 2020. But if they have the bandwidth to keep investing in 2021, they shouldn’t stop, finance pros say.

That’s because technologies like multi- and hybrid-cloud platforms, microservices, self-healing networks, and infrastructure-as-code are among the investment types supporting rapid, efficient product development and innovation that can drive post-pandemic growth.

“Many companies have leaned into this,” said David Wilson, CFO of NS1, a domain name system and internet traffic management provider. 

These transformational investments drive growth in part because they enhance the ability to outpace competitors, he said. 

Even upgrading something as basic as spend management technology can help speed growth, by adding controls to a central finance function and enabling real-time reporting of company-wide expenses, said Thejo Kote, CEO of financial software company Airbase. 

That kind of capability can help management act nimbly in a similar crisis. More immediately, Kote said, the upgrades give employees better tools.

“Spend management provides visibility into, and control over, non-payroll spend,” Kote said. That “provides an excellent user experience for employees to spend company money in a safe and compliant way.” 

Investing in automation for functions like spend management can improve reporting timeliness and accuracy, said Scott Mitchell, CFO of Acendre, a talent management IT services company.

Another type of forward-looking investment is a cash forecasting process that allows for scenario planning, according to Mitchell. By helping businesses understand the ebbs and flows of cash, it can give them insight into what happens to cash, for growth and when things don’t go according to plan. 

New offerings

Not all investment need be tech-related. Dennis McGonigle, CFO of SEI, a provider of asset management and investment operations services, calls the pandemic a good time to up R&D spending on product lines. 

“Initiatives that drive innovation and create opportunities in the market not only enable continued resilience and increased productivity,” McGonigle said. “But they also can help companies gain a competitive edge for growth during and after times of uncertainty.”

The pandemic is also a good time to invest in niche talent, L.J. Suzuki, founder of CFOshare, a financial services firm for startups, said.

“With other companies downsizing, now is a great time to scoop up talent at competitive salaries,” Suzuki said. “This will be particularly favorable for niche or rare talent.” 

Another wise use of extra cash when more people are glued to their computers is brand marketing.

“Since the public is a captive audience, now is a great time to reach new consumers over the internet,” Suzuki said. “If you can afford to wait for a return on your investment, sow the seeds to help future customers remember you.”

Low interest rates and a multitude of struggling companies could also make this a good time to buy competitors — and real estate, he said. Prices of some owner-occupied office buildings are depressed amid the remote work boom, making it another potential opportunity for excess cash to eventually earn a high return.