When it comes to financial processes – CFOs are faced with increasing frustration. With the burden of routine data aggregation and reporting tasks means that supplying boardrooms with fresh insights can prove difficult. Here, Darren Cran, COO of AccountsIQ, talks to us about the modern CFO and how they can become more strategic to bring greater value to the business.
When a business announces a new client or significant line of new business, often the CFO’s gut reaction is to worry about the extra workload for the finance team. When this occurs, it’s a clear sign that the existing solutions in place for managing the business are misaligned with the company’s requirements. And there are many legitimate reasons why the CFO and finance team might be feeling under pressure.
From being responsible for regulatory compliance, keeping Environmental, Social and Governance (ESG) considerations top of mind and working ever closer with the CEO to inform business strategy, there is much to do.
And increasingly, CFOs are also responsible for Digital Transformation and certainly must take the lead on this within their own department. While this isn’t always a straightforward task, literacy in this area is crucial to leveraging technology for providing better, more accurate reporting that helps the CFO to steer a true course through the current volatile economic environment.
And the exhaustive list of responsibilities doesn’t end there. Given the skills shortage within the accountancy profession, talent acquisition and retention also play a leading part in day-to-day activities. Consequently, even the most experienced CFOs can be left wondering how to manage.
The changing role of the CFO
Business never stands still and the role and responsibility of the CFO continually evolves, partly driven by business conditions, and partly in line with advances that technology now offers. At the fundamental level, accounting, reporting and statutory compliance are mission-critical tasks that will always remain within the finance department, and thereby, under the remit of the CFO. But these core activities are somewhat taken for granted by CEOs and the rest of the organisation and are typically seen as the minimum deliverable requirement. It’s important that as much effort and expense are saved on performing these duties as possible, because the CFO of today and tomorrow must spend much of their energy on utilising financial data to influence strategic decision-making at the highest level.
But this is easier said than done when the business trades in different currencies, when the finance team is required to consolidate accounts across multiple entities and when even regular month-end reconciliation is an almost permanent process. These tasks can be complex, manual and mundane, which affects not only the performance of the business but can also leave a fresh and willing team demoralised and demotivated after repeated exposure.
Somehow, somewhere, the CFO needs to reclaim the time and energy that is expended on repetitive tasks, so that the value-added component of the role can be undertaken.
In the current economic outlook, the CFO needs to identify strategic and non-strategic spending and develop a granular view of cost drivers. Often, assumptions on strategically important spending are mistaken or are inherited from previous working practices that no longer match business priorities. It’s crucial that there is a joined-up approach from across the C-suite, so finance leaders can uncover areas to gain efficiencies.
Turning the finance team on its head
It’s true that delivering a consistently high-level of financial reporting that can impact business strategy requires time and skill. Two things the industry, for the most part, are short of. Mark Hoban, Chair of the UK Financial Services Skills Commission (FSSC) termed this not just a skills shortage, but an ‘existential skills crisis’ no less.
Finance leaders must find a way to invert the pyramid within the traditional finance function. Currently, most of the time is spent collecting data and not enough time is afforded to analyse it and generate insights. By automating mundane tasks, finance teams can take advantage of cloud-based software tools which provide timely and accurate data. Technology in this sense provides CFOs with a complete picture of the business, from one moment to the next, allowing them to orchestrate change within their department and also across the business.
Indeed, it is often because of inadequate tools that the CFO delays making rapid decisions and is sometimes seen as a blocker rather than an agent of change. Without data, the dichotomy between fast decision-making, and accurate decision-making is very real. After all, it is the CFO’s role to query expenditure and explore how each pound will perform. Moving to a data-driven environment, where automation and analytics are spoken fluently can quickly help to change this perception.
Thankfully, many of today’s complex accounting problems have been solved. Cloud solutions have been designed to allow the CFO to analyse carefully considered reports, rather than embark on a scavenger hunt to tie disparate data together into a coherent story. This undeniably gives the CFO scope to develop the more strategic aspects of the role: to use the insights gained from the financial data to provide more nuanced input into business decisions, to be able to advise on growth strategies or report in more detail on project initiatives, providing the unique insight delivered by reporting to enhance the experience learned from poring through the raw numbers.
Adopting a modern mindset to technology
But benefiting from the technology requires the correct mindset. Because the finance team is now no longer tied up with mundane and repetitive tasks, no longer required to spend weeks on data entry and can now use one-click consolidation, progressive CFOs can now begin thinking about how to redeploy their teams to capitalise on their talents and qualities. Individuals no longer employed in routine and mundane work can provide a valuable resource to assist other departments, in particular providing agency services to colleagues in the supply chain, sales and acquisitions departments and by providing better, faster and more accurate management reporting that can improve business outcomes.
Only when CFOs can tame the reporting and accounting processes will they be able to really deliver on the promise of adding strategic value to the business. There are many business considerations that only the CFO is in a position to offer the CEO. But this requires having the correct tools in place. Once they are, increased responsibilities no longer seem like a burden, but rather an opportunity.
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