Monitoring the cash register is one of the core duties of the Chief Financial Officer. But how does the CFO of tomorrow fulfill his role as watchdog? We asked Karel Breda, CFO of Immobel Group, the flagship of the Belgian real estate sector. Always prepared for a worst-case scenario, risk management is second nature. We sat down with the guardian angel of Immobel Group.
After an adventurous career journey through Italy, Dubai, the Netherlands and the Asian continent, Karel Breda returned to his home country Belgium in 2018. As CFO of Immobel Group, the largest Belgian and listed project developer, he currently combines a range of financial responsibilities. Data and risk management are a crucial part of Breda's daily bread as a financial director. Although, according to him, this is also a shared responsibility. “The CFO is the gatekeeper of the organization, but in fact there should be a risk manager in every employee.”
The CFO simply monitors the company's cash pot. How do you fulfill that role of watchdog?
"Every potential new project is first challenged by the various departments, including finance. Are the fiscal risks properly covered? Are all assumptions correct? The decision is then made by the investment committee. If the project is given the green light, the KPIs are fixed. These parameters go into our system and we monitor them closely. If the budget has to be increased later, I never do that on my own. Such a decision must be given visibility. That then the role of the CFO is to ensure that everyone is informed and there is debate about it, so that we can learn from it as a company.”
What risks are inherent to project development?
"For us, four major pillars count: purchasing, sales, permits and our balance sheet. If these are in order, we are in a virtuous circle, as we are now. If one of the pillars goes wrong, it could possibly turn into a vicious circle. From the point of view of risk management, it is mainly the permits that we monitor very closely. Handling a permit has become a lot more difficult in recent years. If the permits do not come in smoothly, we investigate what we can do about it. And even if we When purchasing new positions, we first try to properly assess the licensing risk.”
And specifically to a listed company?
"You can get it wrong. If you don't notice certain things, you have to explain this afterwards at a listed company. You have to be very quick to respond financially and that automatically puts pressure on the organization and risk management. Another aspect is the nature and size of our business. We work with a capital of 1.5 billion euros, equity and debt, spread over about eighty real estate projects.
A clear overview is then a must. Are we moving forward in the right way? You don't want a balance sheet full of half-finished developments or cash flow that is too low.”
Were you prepared for a risk such as the corona crisis?
"I also experienced the 2008 crisis. Something like this happens in the economy every ten years. That is why I also take such situations into account. At management level, we are working hard on our base case and worst case for the coming years. From finance we have a very good view of what happens if things shift. Our main focus is liquidity. As long as the invoices can be paid, you remain in control. At the start of the crisis in 2020 We were able to continue without additional financing until the end of 2021. We did, however, borrow additional money for security.”
How easily do you get other people within the organization involved in risk management?
"When it comes to managing risks, everyone looks to the CFO, but in fact we also say: everyone in the organization is a risk manager. If, like our company, you manage a large amount of capital, you don't want only the CFO to keep an eye on the risks and the rest to be left behind.
doesn't care. No, risk management is everyone's job with us. However, I maintain the overall overview, I am the messenger in the story and I try to create more awareness throughout all departments. But in fact, it comes down to: we're all in it together. That is also the cultural one
attitude that we want to encourage at Immobel.”
Besides risk management, what are the major challenges for you?
"The people management aspect. It remains a challenge to allow people to grow personally and keep their jobs interesting. Another major challenge is the implementation of new, data-oriented IT systems. More and more I see the role of CFO as that of someone who is involved with data and data analysis, as a kind of data manager. At the same time, it remains very complex to successfully implement a good system end-to-end, especially in our specific environment. The manual work is not completely over yet."
What skills do you still need to become a CFO?
"That depends on the environment in which you aspire to that role. If you want to become a CFO at an SME, you better become a good accountant and tax specialist. If you want to work at a larger company that needs a lot of capital, you need to know how financing works, how to negotiate with banks or issue bond loans. If you aim for a role as CFO at a really large company, then controlling is the core of what you have to learn. Financing seems to be the most important for many. Sexy and challenging. Yet the CFO at a large company is not concerned with financing on a daily basis, but with controlling and monitoring objectives.”
Three tips from Karel Breda for finance professionals
- Think about your future : depending on which type of organization you would prefer to work for later, it is best to emphasize a few specific financial competencies.
- Keep your knowledge broad : broaden your view in various domains or also look outside finance. This way you gain strategic knowledge that you will need later.
- Show passion and ambition : if you want to grow to the top of the financial department, you have to work for it and show passion and ambition. Those ingredients always remain the basis.
Read the full white paper here
The CFO of the future will be the Da Vinci of his time, it seems. From watchdog to catalyst, leader or innovator: no role is unfamiliar to the Chief Financial Officer. What expertise and skills are indispensable for the coveted job of CFO? And how do you do that, combining all those different hats? In addition to Karel Breda, we interviewed 4 other CFOs about their roles and experiences.
