CFO and the Future: 4 Strategic Decisions to Make Right Now

Dimitri Raziev09 Mar 20225 mins

The role of the CFO has been evolving in the past decade. The COVID-19 pandemic has added the finishing touches to the essence of the role and major responsibilities of the Chief Financial Officers. In the modern world CFO of a company is accountable not only for the financial operations. They also have an impact on the strategic decisions of an organization.

The CFOs surveyed by Grant Thornton right after the pandemic has hit, have admitted that their role transformed more towards being a “strategist” and a “change agent”.

The CFOs are not only the “money” person, they also have to think about the overall strategy as well. This task is for long is not the responsibility of the CEO alone. Moreover, 82% of CEOs believe that the function of the CFOs will increase in importance even further.

The survey of 1,152 members of ACCA and IMA,  who are mainly CFOs and CEOs, have stated that “transformative technology” is the major challenge (over 50%) for a modern CFO among 13 other answer options.

Another quarterly survey by Grant Thornton has identified that 60% of CFOs plan to invest in digital transformation in order to further accommodate for the remote working arrangements.

Below is Kolleno’s advice on what CFOs can do to contribute to the digital transformation of the business. Also, we will show that digital transformation is not as challenging as one might think.

1. Liquidity Management

CFO Manages the Internal Liquidity

Relying on external financing is risky. Also, to rely on the earnings is very uncertain as long as we still didn’t combat the coronavirus or learned to live with it. The smartest move right now for the CFOs is to take charge of the internal liquidity sources. This is completely in the hands of the company. Monitoring the cash flow is crucial during all times, not alone the global pandemic or political unrest. Thankfully, there are tools to help CFOs and the finance teams to be on top of the company’s cash flow.

The Kolleno software extension is adaptable with the major accounting software and will help to minimize the Days Sales Outstanding (DSO). Our SaaS solution is using machine learning technology to manage the whole collection process. It starts from automatically sending the invoices to sending reminders to the customers who delay the payment.

2. Help to Attract Top Talent to the Busines

CFO Utilises the Talent Efficiently

McKinsey has examined how the CFO role has been evolving in recent years.  The respondents who believe that the major value-added activity of the CFO is “building the financial talent pipeline” have increased from 4% in 2016 to 22% in 2018. This dramatic increase indicates that the CFOs are more and more responsible to build a strong financial team. While it is also the responsibility of HR, CFOs are the ones who must spot when the employee is feeling demotivated.

According to the Smartsheet survey of office workers, 78% believe that automation will allow them to focus on more interesting and rewarding tasks. Repetitive tasks like manually processing the invoices, inputting data into excel spreadsheets, and following up on the missed payments are daunting and demotivating. The employees where automation is limited might feel that their potential is not developing and might consider leaving the company. “Being bored” is a number one reason for looking for a new job according to the Korn Ferry survey of 5,000 workers.  

In order to keep the finance team motivated it is vital to automate all tasks that are repetitive and non-creative. Kolleno AR software will remove the tedious tasks like inputting data and preparing the invoices away from the financial team. This will allow them not only to focus on more exciting tasks but also will tremendously decrease the errors.

Besides repetitive tasks, CFO must ensure that the finance teams have essential data to analyze the business performance. Relying on the financial analysts to build the diagrams and prepare the dataset is time-consuming. By removing the responsibility of preparing routine data analysis and allowing the technology to automatically analyze and visualize the data, analysts free up to 20% of their time. Financial analysts can use the time they save on advanced analytics.  

3. Equip the Finance Team to Work From Anywhere

CFO Helps the New Working Environment

The global pandemic has caused disruption at the workplace. Moreover, businesses around the world had to adapt swiftly to the working from home arrangements. Thanks to the vaccines companies across the globe are moving back to the physical offices. However, the readiness to move back to virtual working processes should not be forgotten. Various organizations are now offering hybrid models where it is possible to work from the office and from home. However, CFO has to prepare for the event when the team might move back to remote working.

When the accounts receivable is managed manually, there are a lot of obstacles to preparing and approving the invoices. By digitizing the AR function the pain goes away. With Kolleno the invoices will be prepared automatically and sent out to clients without lengthy approval processes. The AR function will be executed seamlessly without the need to oversee it, which creates more favourable WFH arrangements.

4. Switch to eco-friendly AR

CFO Influences ESG

The recent McKinsey study The new CFO mandate has identified that the CFOs are now increasingly involved in helping their organizations to reach ESG (Environmental, Societal, and Governmental) goals. Furthermore, this finding also overlaps with the expectations that CFOs are now co-responsible for the overall business strategy. During the past years, the ESG agenda has become the key to the future success of the business. Therefore, the CFOs should be proactive in switching to environmentally-friendly solutions.

Automating the AR function is one of the easiest digital transformation solutions that a CFO can do to facilitate reaching the ESG goals of the business. There are various benefits from using less paper, to saving on the fuel costs of postal services.  If you want to know more, about how Kolleno can help to speed up the digital transformation of your organization, contact us and we will happily guide you through the capabilities of our AI-powered software.