Why CFOs are going all in on digital transformation


As the economy continues to battle extreme uncertainty and adapt to ever-changing conditions, businesses are making strides in leveraging digital strategies to ensure they remain competitive and successful in the coming years. This shift is being driven in large part by CFOs who saw their investments in digital tools as crucial interventions that ensured their organization’s resilience during the pandemic. As the role of the CFO continues to expand, so does the need for new technologies, including digital transformation. A new report by PYMNTS.com and Corcentric titled, “Digital Payments: A Changing Economy Sparks New Priorities for Systems Spending“, reveals more about why and how CFOs are investing in digitization as they plan for the future.

Reaping the rewards of digitization

Digitization of finance processes helps executives keep better control over operations, enabling them to create a more agile approach that can adjust quickly and provide an added advantage during times of economic hardship, essentially reshaping how these processes are performed. The report, which surveyed 500 CFOs from the retail, manufacturing, finance and insurance, and healthcare sectors, highlights how finance leaders from across the board see marked improvements from their digital investments. The benefits of their investments include:

1. Fraud prevention and risk management

CFOs across all industries shared that their fraud prevention and risk management systems saw the biggest improvement from their digital investments. CFOs from the retail and manufacturing industry reported the highest gains, with 87% and 81% of them saying they saw a boost in fraud prevention and risk management capabilities. Finance/insurance and healthcare CFOs also saw considerable gains of 74% and 70% respectively.

2. Improved AP and AR processes

CFOs also believed that investments in digital technology resulted in significant improvements to their Accounts Receivable (AR) and Accounts Payable (AP) systems. Every sector surveyed saw gains, with 75% of manufacturing CFOs, 75% of retail CFOs, 73% of CFOs for finance and insurance companies, and 65% of healthcare CFOs reporting improvements in their AR systems. The share of CFOs experiencing the same for AP was similar.

3. Optimized DSO systems

For any company, a reduction in days sales outstanding (DSO) is vital to improving working capital management. The report noted that although all sectors saw improvement, retail and healthcare CFOs topped the list, with 72% of retail CFOs and 64% of healthcare CFOs noting their DSO systems benefited from digital system investments. Meanwhile, 62% of manufacturing CFOs and 47% of finance and insurance CFOs have noted improved DSO system performance.

CFOs are doubling down on their digital investments

This year will not only see more companies joining the digital revolution but will also witness CFOs increasing their existing digital spend. The findings above speak for themselves. While some leaders may have previously been skeptical of the buzzwords surrounding digital transformation, many are now realizing that focusing their efforts on digital transformation guarantees ROI, promotes sustainability, ensures more accurate forecasting, and helps in decision-making. Moreover, with continued economic uncertainty forecasted for the rest of the year, CFOs need every tool at their disposal to remain resilient and retain their competitive edge. In fact, the years’ unpredictable business landscape is often cited as the main reason CFOs want to digitally transform. According to the report, 71% of CFOs at finance and insurance companies describe economic headwinds as ‘very’ or ‘extremely influential’ in their decisions on investing in payment systems, while 61% of retailers and 60% of manufacturers say the same. Strengthening payment systems via tech like automation has proven to cut down costly errors, save valuable employee resources, and drive cash flow. The anxiety over the economy is also causing CFOs to intensify efforts to improve working capital. Having sufficient cash flow and working capital is crucial for businesses to weather turbulent periods, allowing them to cover their expenses, continue to invest in their operations, and take advantage of opportunities that may arise. It’s no surprise then that many CFOs are now putting investments in their working capital systems as their number one priority. Forty-six percent of retail CFOs are planning to invest in these improvements, with other major industries such as finance and insurance (46%), manufacturing (40%), and healthcare (34%) close behind them. Investing in digital processes isn’t just about driving cash flow. CFOs say that it also helps develop a path for modernizing business functions. Tools like artificial intelligence (AI), cloud systems, and automation help streamline business processes, automate repetitive back-office tasks, and eliminate manual errors. This drives efficiency and helps free up employees to focus on more strategic initiatives. As technology continues to evolve at a rapid pace, companies that do not embrace digital transformation risk falling behind. By investing in digital technologies and building a culture of innovation, companies can future-proof themselves and remain relevant in the years to come.

Read the full report by PYMNTS.com to learn how top executives digitally transform their organizations to remain competitive in times of uncertainty. Contact us to get started.