The modern CFO: searching for the best financial stack

Mar 11, 2022

CFO

Estimated reading time: 8 minutes

What you’ll learn:

  • How the role of the CFO continues to evolve thanks to technology and innovation
  • RPA, AI and big data as the main drivers
  • The importance of the right software mix in terms of ERP and accounting
  • The need for centralised data

The role of the CFO: always evolving

Whereas in the past, typical financial practices such as accounting provided the main focus of responsibilities for CFOs and their teams, we are now seeing the emergence of an ever-broadening array of new and alternative technological solutions. The financial world is rapidly replacing entire human-driven processes in accounting, finance, tax management and other areas with fintech.

This fintech revolution is doing the CFO no harm. CFOs are in the unique position of being able to continue experimenting with new tools and technologies, not only to further digitalise their own function, but also to help spread digitalisation throughout the organisation. Beyond their traditional financial duties, they can make a real impact on the business.

The COVID-19 pandemic has given this digital transformation in finance a major boost. So much so that companies that have fully embraced and implemented digital tools now claim to be better prepared for future crises.

In recent years, the responsibility for a company’s digital activities has increasingly fallen to the CFO. Crucial elements in the digital story are the greatly increased use of tools based on artificial intelligence (AI) and Robotic Process Automation (RPA). Data visualisation via real-time dashboards also continues to gain importance.

Robots and algorithms as supplementary employees

Traditionally, finance has been good at processing and analysing data and producing a series of reports or insights that a CFO can use to support the business. But that’s exactly what machines are good at: they consume large amounts of data and then automatically produce a series of insights.

Nobody does advanced education in order to collect data from different sources, dump it in an Excel spreadsheet and then prepare the obtained data for a presentation. Yet, we see this scenario everywhere.

Thanks to RPA, many human activities within finance and credit management can be automated, such as data entry and standard communication with customers and debtors. Replacing routine work and time-consuming daily tasks is the underlying objective.

Moreover, organisations kill two birds with one stone: manual, boring work is eliminated, and the automation of repetitive processes gives teams more breathing space for tasks that require strategic decisions, for advice and for making decisions based on the data. In the battle for talent, this is an extra asset to have.

By also adding AI – and therefore thinking skills – more complex tasks within finance can be automated. For example, AI can assess the creditworthiness of customers, create new links between data and assess doubtful cases based on past data.

Real-time insights and reports

The modern CFO must always have the correct, exact figures available when a presentation or meeting is planned. This also helps to make better and more consistent predictions and complete financial analyses.

Thanks to APIs and other forms of integration, companies today have relatively easy access to a lot of (nearly) real-time data from internal and external sources. With these integrations, organisations can compare new and old insights to optimise their financial history and records.

With the right tools, you can make better decisions as a team. But not all stakeholders are interested in the same data. It is therefore important to tailor the reporting and visualisation of the data to each individual target group. There are various possibilities for this, such as Tableau, Qlik and solutions from parties like SAP and Oracle.

Faster decision-making and forecasting

By collecting all financial data in one place, data-driven insights and faster decision-making are possible. Important decisions will increasingly be based on this real-time data.

The success of the modern CFO also lies in being proactive. Better financial forecasts can be made via predictive models. At iController, for example, smart AI algorithms analyse customers’ payment behaviour. So we can predict when customers will pay the next invoice, and when payment reminders are best sent out.

For example, the AI will automatically shift customers who often pay their invoices late to a stricter follow-up procedure, and customers who always pay on time to a less strict procedure.

Cashflow planning through AI is a lot more accurate and reliable than conventional forecasting. Users of the iController AI platform get to see the cashflow forecasts on a clear dashboard.

In search of the right tools

As mentioned earlier, the traditional role of the CFO is evolving significantly. But without the right toolkit with integration options, it is a challenging job. Or as the authors of the book Nine Keys to World-Class Business Process Outsourcing say, “The value is in the integrated toolkit, not any individual tool.”

At the very least, good fintech software (and its combined application) automates a lot of manual tasks. For invoicing, this could be the following: entering invoice data, checking for duplicate invoices, the process of approving invoices, and all communication and follow-up around this.

And while there is software for all of these, it does not mean that AI and automation have been implemented in all of the company’s financial workflows. So ask yourself the following questions. Do the tools I use maximise team efficiency and minimise the risk of errors? Do I have the necessary visibility and transparency in the cashflow process?

Standardisation of processes

The CFO should therefore first map out the processes between people and tools, and in doing so, should strive for simplification and standardisation. With the arrival of cloud-based platforms, this standardisation is easier to achieve than before, and far-reaching automation is possible.

For example, as CFO, start by automating the processes of small, defined parts in the company, ideally via the basic functions of the ERP or financial software. Later, take the step towards more complex processes, in which various domains come into play.

If possible, the company should also work with the same tools, and not, for example, with different storage services or document management systems where all the information is scattered. Especially in the event of rapid growth or takeovers, the right choices have to be made in this area.

Are the tools still relevant?

If you have been working with certain tools for a while, ask yourself whether these tools are still relevant for the size of the company. Maybe you should look for new tools or modules that can further sustain growth?

Most start-ups have a limited toolkit. Many processes are still manual, and investing in far-reaching software is overkill when there are not yet many employees and the number of incoming and outgoing invoices is limited.

But when companies grow, the need for extra fintech software, such as an ERP and/or a more extensive bookkeeping programme, quickly becomes apparent. Still, in this phase, a lot of manual processes remain, from booking the invoices and paying the bills to manually sending invoices and payment reminders.

Businesses don’t usually grow overnight, and the tools that helped you succeed in the past are not necessarily the ones that will help you grow and build the business in the future. Some legacy ERP systems are simply not designed for today’s world. When data resides in different systems that cannot talk to each other, silos remain, and it is not possible to get new insights.

Therefore, choose an ERP and/or accounting system that allows synchronisations and integrations, in other words, one that is open to communication with other solutions.

In larger companies, the need for extra, specific software is also growing: think of matters such as managing cashflow, monitoring invoices to be paid and payments to be received, software for employees’ business expenses, and so on. Software that can be easily integrated will always have an edge.

Single source of truth

The role of automation cannot be over-emphasised. Not only does it help reduce repetitive tasks to a minimum; it also guarantees the accuracy of data.

However, this requires good access to quality data. It is of great importance that company data is kept in one place. This is referred to as a single source of truth (SSOT). Everyone in the company can make important business decisions based on data that is accessible to everyone.

This single source of truth is virtually a must-have in fast-growing companies. Sales people should have access to the latest sales documents and presentations, and marketers should have up-to-date figures on the number of customers and partners the company has.

Today, data is often scattered across different departments within the company, and there are overlapping versions of the same document. This underlines the need for good cooperation between the various departments.

Good data governance requires a great deal of effort, if only because choosing the appropriate platform and then setting it up is not easy. Technology research company Gartner estimates that 55% to 75% of all ERP projects fail to achieve their objectives.

It is best practice to give the finance department a leading role throughout the data governance process. By doing so, the data can be enriched and cleansed in such a way that you can create your own reports, analyses or predictive models without the need for IT intervention.

Building the right solution stack

The ideal software solution stack strives to combine operational efficiency, security and accountability while reducing errors. With the right mix, the vast majority of manual tasks can be automated, and a proper workflow established.

A robust stack also lays the foundation for future growth. The right infrastructure allows for scaling up and growth and provides teams with the optimal framework to do reporting, meet the requirements of legislation and compliance, and apply the necessary automation and data management. A CFO who understands the importance of the right mix will play a strategic role in the company’s growth.

As a result, a company can grow further without placing an additional burden on the shoulders of the finance department. And it virtually eliminates the risk of human error.

The right toolkit not only provides the finance department with excellent added value, but also contributes to a better service for employees, suppliers and customers.

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