Saru Kaushal, Vice President and General Manager, Global Commercial Services, American Express Banking Corp., India American Express Banking Corp. on what is keeping the CFOs buoyant and how technology will lead the finance space.
“India is leading the way in terms of both business confidence and investments”
Q: What are the factors driving the optimistic business outlook in India and globally?
Saru Kaushal (SK): There are enough reasons to cheer in 2018 with political change and global trade policy likely to strengthen expansion prospects for companies this year. With most global finance leaders expecting exports to become more important for their company’s growth, the role of imports will vary from region to region.
The American Express’ Global Business & Spending Outlook 2018, which was conducted by Institutional Investor Thought Leadership Studio revealed that global senior finance executives remain optimistic about economic growth prospects for the year ahead and are less anxious about economic and political surprises — far fewer will consider outright exiting high-risk regions — but still, are considering better ways to manage risks that threaten business performance. This accounts for growing interest in expanding enterprise-level risk management systems and process improvements.
Pro-business global trade policies and continued low interest rates have led to a prevailing optimism amongst Indian finance executives, as this will support sustained corporate spending, investment and hiring. According to the survey, senior finance executives have indicated willingness to increase spending and investment this year but they are most likely to focus their budgets on specific growth initiatives that directly target meeting customer needs and develop new products and services.
Q: How is India placed vis-a-vis global businesses in the next few years?
SK: According to the survey, Indian finance executives remain optimistic about the Indian economy and are likely to increase spending on travel and entertainment (T&E), invest in improving administrative process efficiencies and invest on mobile technology and hardware and infrastructure this year to help meet their business priorities.
In fact, India is leading the way in terms of both business confidence and investments. Efficiency has become the keyword as companies take a back-to-basics approach and focusing on the fundamentals – better serving customers and meeting their needs, developing new products, entering new markets and prioritizing business transformation and innovation. Businesses are reiterating the need for increasing spend on T&E, optimising cash flow and using it judiciously to grow and protect the business.
Q: What would you say should be the focus of CFOs to ensure that they don't miss the opportunities in this market environment?
SK: For CFOs to up their game in today’s VUCA (volatility, uncertainty, complexity, ambiguity) world, it is imperative they focus on the sharing economy. About 87 per cent of the respondents believe that commercial innovations of the so-called “shared economy”, e.g., those used by ride-sharing services like Uber, or lodging services such as AirBnB and OYO Rooms, will have a substantial impact on their industry in the next five years with 60 per cent executives agreeing that their company’s travel policy allows employees to use sharing economy services for lodging or transportation when traveling on business.
Again, better meeting customer needs has become a top priority and spending plans centre on technology. Better meeting customer needs is a top priority for survey respondents in India (63 per cent). Companies are also most likely to focus on cyber-security and the protection of customer, supplier and employee data in the next two years.
Q: What are the key findings of the survey regarding the emerging role of the CFO in the new business paradigm?
SK: Interestingly, the survey has reflected an evolution of Indian finance executives from merely managing the balance sheets to taking key leadership roles, as 53 per cent executives see their function as that of strategic advisors. Further, on an average 40 per cent of finance executives spend their professional time on strategic planning and collaboration with line of business management along with fulfilling their core department responsibilities.
The survey also reveals that majority of corporate finance groups (67 per cent) play a leadership role in ensuring equal, fair, and equitable compensation at their companies.
Q: Is there a change in the spending and investment pattern globally? What about India?
SK: According to the survey, 37 per cent of the CFOs are likely to spend more on travel and entertainment (T&E) than last year, whereas 50 per cent maintained that they are likely to keep the spending same as last year.
The survey further revealed that 33 per cent of the Indian CFOs are likely to spend more on transportation/logistics and 53 per cent on hardware and infrastructure, while half of the senior financial executives (50 per cent) aim to increase spending on mobile technology. About 40 per cent of the CFOs surveyed said that they are likely to invest more than last year in improving administrative process efficiency (e.g., streamlining financial, account payables, or procurement process) to help meet business objectives.
Q: What solutions does Amex offer for business expenditure management?
SK: For any business, managing expenses is as important as growing revenue. Efficient expense management solutions are equally important for both, small and large businesses, to track their spending, and control their expenses.
American Express has a client list of over 60 per cent of Fortune 500 companies globally. We offer customised solutions to these companies, helping them streamline purchasing and simplifying reporting and reconciliation processes for work related expenses.
With American Express’ Expense Management Solutions, travel expenses, entertainment, and work related costs can be recorded in a complete expense management system. This provides complete transparency of company expenses, allowing management to more effectively achieve various objectives. We also provide various expense management solutions to help companies streamline processes to further reduce time and cost.
Q: What are the corporate payment solutions CFOs must look at?
SK: While multiple solutions already exist to help businesses integrate the full gamut of their payment processing, accommodating vendors and suppliers, most payments processing companies are still delivering one-size-fits-all solutions rather than customising the offering for a company’s unique needs. Going forward, expect more companies to step up their efforts to engage with their customers through digital payments.
Businesses should look at designing solutions to differentiate user experiences with things like customisable analytics platform that gives a holistic view of where the organization spends money. As technology evolves, companies will conduct transactions with technologies that recognise unique fingerprints, palms, retinas or faces. And, of course, the most satisfying corporate payment solution will be bespoke – co-created with a client!