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How digitisation impacts the evolving role of the CFO

by | Aug 17, 2022 | 0 comments

The pandemic revealed how unstable and uncertain economies could be. As such, it becomes all the more critical for businesses to leverage digital technologies, especially AI and data-focused applications, to ensure that they make informed decisions.

As technology continues to break barriers, today’s Chief Financial Officers (CFO) are also going beyond their traditional responsibilities and taking on a multidimensional role. They shape and drive corporate strategy in multiple areas, from technology and organisational design to organisational culture and supply chain resilience. CFOs are becoming increasingly tech-savvy, and accounting automation is high on their priority list.

How is digitalization changing the role of the CFO?

Traditionally, finance departments were solely responsible for tax, bookkeeping, financial planning, and other finance-related tasks. Now, businesses expect their CFOs and finance department to drive business strategy.

Strategy requires a deep understanding of your company’s products and buyer personas. It also requires vision, business acumen, and proactive execution. Since we live in a digital world, it is only natural that strategy also requires digital savvy. Instead of emails and excel sheets, companies are now using powerful, advanced tools.

The pandemic had a profound impact on this digital transformation. A survey conducted by McKinsey revealed that the COVID-19 crisis had accelerated global digital adoption to 55% from the 31% average pre-COVID. From giving rise to remote working and the surge in e-commerce, this digital transformation has significantly changed customer behaviour and expectations. The role of the CFO and the finance department had to and are still adapting to these changes.

A CFO’s Guide To Business During The Pandemic

The value of automation for CFOs

Automation is one of the top C-level priorities right now. That’s because modern technologies such as Artificial Intelligence (AI) and blockchain have the potential to make organisations more competitive and meet their strategic objectives. In a recent study by PYMTS, 70% of CFOs are digitising their AR and AP processes because they believe it will increase the lifetime value of their customers. 

Regarding automation, accounts receivables and account payables are often the low-hanging fruit. It is easy to replace the manual processes in these functions with automated ones for quicker ROI.

Automation can also help streamline other finance processes, making the entire department efficient and agile. And when paired with data analytics, it can be a more powerful tool for CFOs.

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How CFOs identify opportunities with data

CFOs must now be proactive and quick at identifying emerging opportunities. With access to precise data, CFOs now make more informed decisions and predict client behaviour. 

For example, let’s consider credit management systems. CFOs who use credit score data can assess a customer’s risk even before onboarding them – affecting how credit terms are determined, eventually protecting your business from bad debts and resulting in a healthier cash flow. Using technology to streamline financial processes and provide critical insights reduces risk and provides a seamless experience that a traditional credit controller cannot.

How an enhanced credit application process can protect your business from bad debts

CFOs must also watch for emerging technologies impacting business success and growth. Accounting software, for example, can be further enhanced when integrated with an online payments system, AR automation software, credit risk management platforms, and much more.

From accountant to strategic leader

With companies undergoing digital metamorphosis, the CFO has become a strategic partner for the shareholders and general managers of the company. No one knows the company’s numbers better than the CFO, be it costs, EBIDTA, profit, margin, or the stock market. However, there is a need to supplement this knowledge with softer skills and the ability to lead organisation-wide strategy.

Clients today expect a lot from the finance function. They expect the CFO not just to be an accountant but have a wide range of core competencies. The modern CFO should be a commercially aware business leader who can strategise and drive the business’ performance. 

In its recent report, Deloitte predicts that by 2025, the role of Finance will focus more on delivering quality insights. That makes the CFO a core contributor whose ideas add value to the business. Their knowledge regarding risk management, investment analysis, business partnership, IPO, and so on is vital to how decisions are made throughout the business.

infographic showing the four roles of the modern cfo with help of AR automation

The four roles of the modern CFO

CFOs today wear many hats – performing diverse and challenging roles within an organisation. Traditionally, the CFOs role is limited to preserving an organisation’s assets, getting the books right and running an efficient finance operation. But modern CFOs now also play the role of strategists – shaping action plans and the direction in which the organisation moves. They also have to become catalysts, helping to drive the organisational vision.

1. CFOs help minimise risk and protect the business’ assets.

Regardless of the industry or the company’s size, risk mitigation and regulatory compliance are high on the to-do list of every CFO. A lot of effort goes into monitoring, maintaining, and mitigating compliance risks. A CFO also needs to ensure that his team closes the books correctly. They are also the ones who have to communicate value as well as risk issues to the board and investors.

Business process automation ensures that you have access to reliable data and greater process transparency. In the role of a Steward, access to real-time data and process transparency is the ultimate pay-off for a CFO.

How an enhanced credit application process can protect your business from bad debts

    2. CFOs are responsible for an effective and efficient finance department.

    CFOs are responsible for running an effective and efficient finance department, providing services such as financial planning, financial analysis, taxation, treasury, etc. Automating financial processes results in greater operational efficiency. You also get access to accurate data, which gives greater insights and forms the basis for data-driven business decisions.

    3. CFOs play a key role in determining the business’ future direction

    As strategists, CFOs can play a key role in determining the organisation’s future direction. They can provide financial leadership, aligning financial strategy to support business growth. In addition to capital market financing and mergers and acquisitions strategies, they can help their companies make suitable long-term investments.

    CFOs can leverage technology such as automation to gain deeper insights and drive greater efficiency. Technology can also be beneficial when pursuing new opportunities for business growth.

    4. They are the voice of change in the finance function and the business

    CFOs have the power to drive numerous initiatives that could benefit the organisation, such as pricing execution, cost reduction, procurement and more. These initiatives have the potential to add tremendous value to the company. With the help of technology, they can make more informed decisions in driving initiatives that can significantly impact and move the business forward.

    The modern CFO and digital technology

    The modern CFO is so much more than just a number cruncher. By embracing digital technology, CFOs are more equipped to develop new skills that can help businesses become more agile – not just in simplifying processes but also in anticipating risks and predicting new opportunities.

    If you have questions on how ezyCollect can help you and your finance team,  talk to us today and one of our AR experts will walk you through options for your business.

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