The role of the CFO has changed
In recent years, as technology has evolved, so too has the role and day-to-day activities of individuals working within finance. Nowadays, financial processes within businesses are using automation technology, and this is on the rise. Research data from the 2021 edition of Visma | Onguard’s Fintech Barometer discovered a significant uptake in robotic process automation (RPA) among financial organisations, with 61% of organisations now either using this technology or developing ideas on how to incorporate it, increasing from 46% in 2020.
Supporting technologies are giving finance professionals real-time access to data from which they can gain valuable insights. As a result is transforming the role of the finance professional and the CFO.
Understandably, the initial introduction of technology led some CFOs to question their job security. But the reality has proved to be different. With less time spent on manual activities such as chasing debts, CFOs can focus on the bigger picture issues. It gives them time to work on tasks that are in greater need of their attention. Driving the digital transformation strategy of the wider business is the perfect example. It is now actively on the agenda for 90% of CFOs and financial professionals, having risen from 68% in 2019.
Across the business world, companies have been automating routine administrative tasks, thus reducing the back-office work done by people. Employees are taking on more challenging roles as opposed to those easily automated by AI and robotics. So as jobs change accordingly, it’s essential for CFOs and financial managers to develop new skills. For instance, the automation of dunning processes requires CFOs to develop their skills to interpret and analyse the data collected within their credit management system. CFOs need to harness their analytical, communication and programming skills as they move into more value-adding roles.
With CFOs driving towards these more strategic, value-adding roles, their role today is more akin to a conductor. They need to check the financial lines of an organisation while providing the insight and evidence required to help push the business forward. It’s all about realigning the focus to management and oversight of financial processes, rather than carrying them out. This includes customisation, ensuring each customer’s preferred communication channels and invoice payment methods are understood and delivered. Allowing the business to interact with customers in the way customers prefers will increase the chance of invoices being paid on time and help to strengthen those existing relationships as well.
Big data provides CFOs with key insights into a wide range of issues. And identifies as one of the biggest trends to have an impact on the financial sector (44%) in Visma | Onguard’s research. This is up from 26% in 2019. For example, looking at buying signals of customers, companies can drive better commercial decisions. UPS use data to automate the planning of its delivery routing, and with AI, can enable paradigms such as predictive maintenance to know in advance when breakdowns will occur.
Big data is of inestimable value to organisations, particularly thanks to its ability to be used in predictive analytics. Through predictive analyses, finance teams can make connections which inform decision-making processes. It allows finance professionals to add strategic value by being proactive, rather than reactive. For example, in credit management, predictive analysis may show that a certain customer pays its invoices on average within 28 days for the past seven years. This means it is highly likely this will continue when sending the next invoice. Finance professionals can use this information to decide how they interact with this customer. Meaning they chase for payment only after that time period has elapsed.
With increased real-time data insights available through a single system, CFOs are better able to make decisions based on facts, rather than assumptions. This is key as more international procedures and regulations are introduced. Compliancy is critical when considering their impact on the order-to-cash process. If all the necessary information is always accessible, the process will be optimised. Any concerns as to whether the latest information in the systems is correct will disappear. Having real-time insight into this data allows CFOs to react immediately. It gives them immediate oversight to thus communicate the financial status of the organisation and to make the necessary adjustments.
Often, the siloed nature of large companies inhibits the efficiency of a CFO as they might lack visibility and are not always privy to important information. If each department works in isolation, it means that the finance department won’t be as effective. Collaboration is essential in ensuring that a sale really comes to fruition. With more time freed up, CFOs can collaborate with other departments to ensure the organisation optimises all of its financial operations.
For instance, the CFO can increase the collaboration with sales reps as businesses often see a real disconnect between the way sales and credit control teams work. Even despite their roles being very closely linked. With more time to align with colleagues, the CFO can help departments have a better understanding of what other departments are working on. They can also communicate how this may impact them, helping to improve the business’ credit management processes.
This is largely reflective of where the CFO sits in a financial organisation today. Acting as the internal business partner who advises policymakers and directors on strategic choices based upon the financial status of the organisation. To do this, they need access to real-time insight. With over two-thirds of businesses now either fully using fintech internally or working with an external partner to develop in-house processes (69%), an increase from just 47% in 2018. Data is allowing the CFO to be the bridge between departments. Driving the organisation through turbulent external factors such as the pandemic and beyond.