How CFOs are Embracing Technology to Get Ahead
Organizations increasingly look to the office of the CFO (Chief Financial Officer) for more strategic perspectives and guidance, but the role is also expanding, requiring CFOs to take on more areas of responsibility. In fact, the number of functional areas reporting to CFOs increased from 4.5 in 2016 to an average of 6.2 in 20181 and that broader role continues today.
The last few years have seen the changes to CFOs’ roles accelerate along a technology path. The coronavirus pandemic pushed technology to the fore for most businesses, as they grappled with remote working, electronic delivery and cloud-based collaboration. CFOs had to get up to speed quickly to oversee investment in essential new technology, while turning to technology themselves to provide faster insights into every aspect of the business
Traditionally, CFOs were entrusted with ensuring the company financials were all above board and ticking over smoothly. Today, many finance functions, such as credit management and payroll, are increasingly automated. This requires CFOs to be more engaged with technology services and solution offerings than ever before.
CFOs, like the rest of the C-suite, need to speak the language of technological transformation in order to adapt and collaborate effectively on organisational goals.
Creating value, not just managing spend
CFOs must create business value, not just own the financial processes that underpin the business. CFOs are now expected to supplement their financial acumen with tech savvy, to deliver the financial performance and insight a successful business needs.
In a 2021 article from Forbes called The New Essential CFO Skillset, Jeff Thomson expounds a similar view:
“Traditionally, the CFO was seen as performing two primary roles: custodian of the budget and protector of critical assets. Now the CFO must capture key performance indicators that provide insight and foresight, that will inform the future course of the organization… CFOs are now the stewards of new technology and process adoption, to unlock efficiencies and enhance agility. One trend we see among clients is the expansion of their automation journeys across the financial close process, to free up F&A teams to focus on high-value work that helps the business grow.”
Automating, streamlining and integrating
With recruitment challenges at an all-time high, businesses can no longer afford the inefficiency, and/or negative impact on staff morale, caused by repetitive manual tasks often found in traditional financial processes. Technologies such as electronic invoicing presentment and payment (EIPP) for invoice delivery, and electronic invoicing processing, have reduced workload and inefficiency in accounts receivable (AR) and accounts payable (AP) departments, respectively. But CFOs need to move beyond the data silos that can result from typical implementations of these point technology solutions in order to achieve real-time and holistic visibility of their cash position, as outlined in this study by Forrester for Corcentric.
Keeping up with the speed of business
Experiencing the unprecedented impact of external factors on business in the last few years – from pandemic to supply chain and recruitment crises – has driven CFOs to forecast more frequently and seek improved visibility and control of the business and financial processes needed to quickly adapt to change.
Technologies such as artificial intelligence, predictive analytics and robotic process automation (RPA) have vastly improved forecasting and the speed with which businesses can adapt processes to commercial pressures and opportunities. These technologies are part of a critical new toolkit for CFOs to direct funding to where it is needed most and reduce or delay non-essential spend.
Expecting CFOs to accelerate their tech acumen in isolation is unrealistic, which is why many turn to managed services, consultancies, and expert partners to shorten the time it takes to apply their financial expertise through technology and deliver the results they need.
Navigating from point solutions to cohesive digital transformation
Although it falls under a CIO’s jurisdiction to outline and drive the technology stack and structure underpinning the business, CIOs look to their CFOs as knowledgeable peers with whom they can review technology investments and savings.
Finance departments have often made significant investments in technology and digitalization, deploying solutions based on the most urgent priority – these tend to be point technology solutions designed to drive incremental improvements. Where they exist, these point solutions must be stitched together, or data becomes siloed and holistic insights harder to attain.
It’s rare to find an enterprise technology stack that isn’t somewhat held together with bridging technology and process knowledge, held in-house or by business process outsourcing (BPO) administrators. CFOs need to work in partnership with their CIOs to evolve these networks of discrete point solutions, to meet the reality of disjointed terms and fragmented systems that are commonplace across trade partnerships.
This is why CFOs are shifting their focus beyond optimizing at the department level, no longer treating Procurement, AP, AR, and Treasury separately. Instead, CFOs need to optimize inter- and intra-company processes for how they purchase, pay, and get paid across the source-to-settle continuum.
1 McKinsey, The New CFO Mandate: Prioritize, Transform, Repeat, December 2018
If you want to find out more about how Corcentric ManagedAR can fix DSO at as little as 15 days, without negatively impacting customer experience, and without the need for capital investment, then get in touch today, or download our white paper on How Managed Accounts Receivable Unlocks Working Capital.