Strategic Role of the CFO: Harnessing Data Power

Dimitri Raziev14 Jun 20224 mins
Strategic Role of the CFO: Harnessing Data Power

In the business world, the theory of evolution is tangible. Within this fast-paced environment, nothing can escape change. Not even Chief Financial Officers, whose role ultimately evolved with the recent shift toward digitalisation and is in constant expansion. With the global pandemic and the increased attention to social and environmental issues, the rapid adoption of new technologies has been a further incentive for CFO to evolve. Finance? Strategy? Now the CFO blurs the lines between what used to be two distinct areas of expertise. 

Darwin’s theory of evolution and the digital CFO 

For a long time, CFOs worked backstage. They were meeting with investors and banks, and working in silos with the finance team. The silo mentality has challenged businesses’ growth and prosperity by creating and maintaining divisions. A vicious circle often followed: CFO’s lack of visibility resulted in poor communication, resulting in delays in crucial operations. 

CFO’s role primarily consisted of overseeing the financial statements. Also, it involved interpreting data, taking care of compliance and regulations, and providing financial report analysis. What has changed lately? CFOs still track cash flows and manage costs. They still deal with compliance and reporting. However, they count now among the main actors, the protagonist of a company’s success story, driving growth and efficiency. 

According to Accenture’s latest global study on the role of the CFO, CFOs are essential actors in the digital trend. 81% of CFOs identify innovation as one of their primary responsibilities. Additionally, 77% see accompanying business in their digital transition as their responsibility.

Having a digital CFO is a real asset for the company, increasing its competitiveness. Conversely, by delaying the adoption of digital tools, CFOs lose the potential to add more value to the business and effectively strategise for the future.

From silo to synergy, thanks to automation 

Now relieved from routine and burdensome tasks thanks to automation and embracing digital tools, the CFO’s role is no longer limited to financial management, overcoming the silo mentality. Automation significantly enhanced the fluidity of processes by increasing the coordination of the different activities of financial departments. As a result, finance and accounting teams can scale for growth and work more efficiently. 

On the other hand, thanks to the power of detailed data and technology, the CFO’s insight improves the CEO’s decision-making and helps the company achieve long-term business goals. The real-time data they collect is crucial to the company’s executive forces, who need to take quick and efficient actions when it comes to strategy. Technological power dramatically accelerates financial processes, which can almost be run in real-time. According to research led by Gartner, the most productive CFOs spend less time than their peers on daily repetitive finance function activities. Instead, they reallocate that time for analysis and finding out how the business can create value and guide their team in the execution of these objectives.

Research from the McKinsey Global Institute shows that 57 per cent of finance activities can dramatically benefit from automation. 40 per cent of activities like cash disbursement, revenue management, general accounting and operations can be fully automated. While 17 per cent can be mostly automated. This research is adamant and demonstrates how CFOs should embrace the digital transition and welcome the seamless simplification of their core activities to free up their time and optimise their potential

Accounts Receivable at the top of the digital CFO’s agenda

AR management count among the activities whose automation greatly benefits finance teams and CFOs. Accounts receivable are essential to the CFO’s forecast and cashflow provisions, risk management and credit control. With an accurate, real-time insight into the company’s cash flow, CFOs can predict future cash positions and detect potential threats to the company. Undeniably, the revolution starts in the back office, with leveraging automation to deal with A/R and make the business operationally efficient. 

By streamlining core finance processes like Accounts receivable management through automation and software-as-a-service technologies, finance teams will become forward-looking and essential to establishing new business models and growth strategies.

If the CFO gradually becomes a vital strategic partner, so are Accounts Receivable among forward-thinking companies. Healthy management is essential to the company’s success. By freeing up teams’ time to focus on revenue-driving tasks and strengthen work capital, companies make a strategic choice for their future. 

Therefore, automation of AR management, is essential to CFOs as they provide critical, real-time data to support their cashflow provisions. As a result, it guides the CEO’s decision-making. 

Financial automation is the critical factor differentiating looking-forward CFOs and companies from those who will fall behind in the market. With the evolution of the business landscape, CFOs should stay at the cutting edge of fintech. They are no longer working from the back office. They are on the stage where the magic happens, in bright light. With the right digital tools, CFOs can optimise the company’s performance and become the strategic partner of the CEO.